Netflix Antitrust Case to Continue

Netflix's apparent attempts to force Blockbuster out of the online rental market were stopped for the time being on Tuesday, as a federal judge ruled that Blockbuster would be allowed to proceed with its antitrust case against Netflix. The lawsuit was filed in response to a patent infringement suit filed by Netflix in April of this year.

That case attempted to shut down Blockbuster Online through an injunction. Netflix claims Blockbuster infringes on two patents, one related to the automatic queue, and another that allows for the automatic receipt of new DVDs as well as reorganization of the queue.

In June, Blockbuster shot back at Netflix, filing an antitrust claim that alleged the company was attempting to monopolize the online DVD rental industry through litigation, and said the lawsuit was based on unenforceable patents. Blockbuster is also using the "prior art" defense in attempting to overturn the patents, a common defense in these cases.

Netflix petitioned the court to dismiss Blockbuster's claims, as well as split the lawsuits into different proceedings, and postpone the discovery process until after the patent issues are handled. U.S. District Judge William Alsup rejected all three motions, saying Blockbuster had a case, and no harm would be done by allowing both cases to proceed.

"Blockbuster may be forced out of the market, which would cede to Netflix virtually complete control of the online-DVD market," Alsup wrote. Netflix would, however, be allowed to refile for a dismissal later in the proceedings if it so desired.

Blockbuster said it was pleased with the ruling, and would continue to proceed on the antitrust claims. Netflix said it would continue to defend its business methods and intellectual property.