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Blockbuster Netflix Settlement

On Wednesday, video rental companies Netflix and Blockbuster announced a settlement was reached in their ongoing patent suit.

settledIn the case,  filed in April 2006, Netflix had claimed  Blockbuster’s Total Access video rental service violated Netflix’ patents for its business method.  Blockbuster had counter-sued with charges of fraud and anti-trust violations.  Blockbuster had  also claimed that the Netflix patents were too broad to be enforceable.

Terms of the settlement were not disclosed but a Blockbuster spokeswoman said the settlement would not have “any material effect on [the Company’s] financial performance.”  Further, Blockbuster will not change either its website or business models. 

With the suit behind them, the two video rental companies are now free again to continue their bitter rivalry.  In efforts to capture market share and trump one another, they’ve been spending heavily on marketing.   Both companies have also been working to gain exclusive content rights to gain an edge.

Back in November Blockbuster signed a first of kind exclusive distribution deal with the Weinstein Co.    For the privilege of exclusive rental rights, Blockbuster agreed to pay a minimum guaranteed fee (based on box office results) to Weinstein Co, plus share revenue from rentals.    In its own effort, through its Red Envelope Entertainment property Netflix has been buying content to offer exclusively.  By year end they will own rights for about 200 Movies.

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