Editore"s Note
Tilting at Windmills

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June 27, 2003
By: Kevin Drum

BUSINESS PROCESS PATENTS....Last month I wrote a post about my general dislike of "business process" patents, and today I have another excuse to write about it: Netflix, a company that rents DVDs over the internet, has been granted a patent that covers various aspects of its business model.

So what do I think about this? I'm not sure. For those unfamiliar with Netflix, here are the basics of how it works:

  • Netflix charges a flat monthly fee.

  • Customers order DVDs over the web.

  • DVDs are shipped and returned via mail.

  • You can order up to three DVDs. When you return a DVD, you can order another one. In other words, you can have a revolving library of three DVDs in your hands at all times and you can keep them as long as you want. There are no late fees.

Overall, it's a clever and attractive model and has deservedly attracted quite a few customers. If I were considering a patent for the totality of what they do, I might be inclined to grant it.

The problem is, none of the specific pieces seem to be worthy of patent to me, and the New York Times story doesn't provide much insight into exactly what's being patented:

The patent gives Netflix intellectual property protection over the technology at the core of its business: the way that a customer sets up his or her rental list; and the way the company sends the DVD's. The patent also grants the company exclusive control over many other small parts of the process of online DVD rental.

The patent, which was filed in 2000, has 100 claims over all. The company has other applications pending with the United States Patent Office, including one on the intricately designed envelopes it uses to send the DVD's.

I wish there were someplace to go to get some commentary on the individual patent claims, but I can't find one and the NYT story was the most detailed I came across in the mainstream media.

So what do I think? I still don't know. What Netflix has done is clever, but I'm still concerned that these individual patents cover things that aren't really nonobvious at all and accomplish little except preventing legitimate competition. It will be interesting to see how this plays out.

Kevin Drum 10:17 AM Permalink | Trackbacks

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