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Netflix Sued For Violating Antitrust Law With Its Patents

from the who-to-root-for? dept

I'm pretty skeptical of most class-action lawsuits. They're often filed over bizarre claims, and the settlements almost always seem to enrich the lawyers a lot more than the "class." Sometimes, we've even seen the settlements seem more like marketing for the company being sued. That's not to say all class-action lawsuits are bad. In some cases, they can do a great deal for consumer protection. I'm a little bit torn over this latest class-action lawsuit in figuring out which side of the line it falls under. This morning, a lawyer involved in the case sent us a filing his firm recently made to initiate a class-action lawsuit against Netflix, claiming that the company has violated antitrust law by fraudulently concealing prior art related to the patents it's currently using to sue Blockbuster. We were surprised that Netflix went this route, after it seemed as the company was winning in the marketplace (easily) against Blockbuster and others -- and it seemed like the patent wasn't needed for Netflix to remain competitive. The filing, however, suggests that there may be more to this story, and that Netflix carefully used the threat of patent litigation over these two patents to push others out of the market. That may be difficult to prove, but what's more interesting is that the filing highlights prior art that Netflix clearly knew about, but which the company did not include on its patent applications. Patent law requires that you disclose any prior art in a patent application, and the lawsuit alleges that Netflix committed antitrust fraud by concealing the prior art.

Certainly, it makes for an interesting argument. Patents grant a government-backed monopoly -- which should get you around any antitrust violations. However, if that patent is obtained fraudulently, then I can see a pretty compelling claim that you've abused antitrust law. It would be interesting if other such cases start popping up (and, indeed, the lawyer who sent it to us said his firm is looking for additional patents to go after in this manner). It certainly is an interesting way to go about defeating dangerous and harmful patents, but really, if the patent system were working properly, this type of class-action lawsuit shouldn't even be needed. Either way, given the state of the patent system today, having one more weapon to go against dangerous, innovation-stalling, competition-blocking patents might just be a necessary evil.