I am still not a lawyer, but an interesting lawsuit is talked about at Law.com. Unfortunately, the write-up there isn't all that interesting. Here's the gist of the case: Netflix got two "business process patents" that cover how it rents movies over the Internet. Blockbuster is now renting movies over the Internet, and Netflix is suing for patent infringement. Blockbuster is counter-suing, claiming that Netflix is trying to use its patent to illegally become a monopoly in Internet movie rentals.

They are both garbage lawsuits. It's stuff like this that makes foreigners think the US attorneys are trigger happy. I'm inclined to agree.

First, Netflix's patents aren't going to hold up in court. In order to get a patent, an idea must be novel (that is, never done before) and nonobvious (that is, not something that any schmoe could come up with). Netflix's way of doing things is novel because any difference from how things used to be done is novel, and Netflix can show something there. However, there is just too much "prior art" for it to be nonobvious. There were experiments in the late '80s and early '90s to determine if it would be profitable to sell movie downloads (like iTunes now does). Because Internet connections weren't high speed at the time, these experiments simulated the inconvenience of downloading a movie (compared to the inconvenience of going to the video store) by having the customer call the video store, which would put the movie into a VCR connected to the customer's TV with a long cable.

Anyone familiar with these experiments (or with, say, just about any early '90s "Internet company," from Amazon.com to online restaurant or grocery stores) would have been able to come up with the general "go to a website, rent a movie to be mailed to house, mail movie back after you've watched it" concept when Netflix filed the patent. And I'm familiar with these experiments because they were in a popular textbook about programming.

Blockbuster itself may be able to point to internal memos showing that it was looking at this general idea five or ten years before Netflix filed for the patent. And while the Netflix patent may stand if enough details are thrown in (no late fees, monthly subscription model, etc.), there will be enough ground carved out that Blockbuster will be able to rent movies over the Internet.

But even so, Blockbuster's counter-suit has absolutely no merit. Patents are defined as legal monopolies granted for a limited period of time. Judges eventually decided that it's wrong to use that legal monopoly as super-duper leverage in getting an illegal monopoly, so Blockbuster's attorneys are actually relying on a real legal theory. However, that legal theory is based on anti-trust law, and one of the first questions in an anti-trust case is whether there is a monopoly in a defined market. The definition of market came into play in US vs. Oracle, where the judge made a big deal about how customers viewed the markets.

Customers realize there is a car market and a school bus market, and that the two are separate. However, customers don't think of "Internet video rentals" as a different market from "traditional video rentals," so Blockbuster is going to have a hard time convincing anybody that its smaller competitor Netflix is actually a monopoly player in this "Internet video rental" market, or that Netflix can seriously raise prices without people flocking to competitors (a common rule of thumb judges use to determine if there's a monopoly; if Netflix raised prices too high, people of course would flock to Blockbuster and traditional video stores, which really hurts Blockbuster's case that the two companies are in separate markets).