The terms of the settlement were not disclosed but a Blockbuster
spokeswoman said that the dispute was now completely settled and
that the company had no "ongoing obligations" to Netflix.
Online film rental firm Netflix has double the number of online
subscribers as Blockbuster with 6.8 million customers. Blockbuster,
which operates a diminishing network of rental shops, has had to
chase the online business which has threatened the business of its
local shops.
When Blockbuster launched its online rental system Netflix sued
the firm, claiming that it violated a queueing system for film
orders on which it held a patent and on its method of charging
subscribers a monthly fee.
Blockbuster counter-sued, claiming that Netflix's case was
designed to stifle competition, and that its claims were so broad
as to be unenforceable.
It said that Netflix had used deceptive practices to obtain its
patents and was attempting to monopolise the online rental
business.
Blockbuster said that the settlement agreed this week would have
no impact on the company's ongoing performance. "We can put this
matter behind us and that's good news," Blockbuster spokeswoman
Karen Raskopf told the Dow Jones news service.
The film rental industry in the US is worth $9 billion a year,
and competition between Blockbuster and Netflix is fierce. Netflix
this week matched a $1 price cut on one of its most popular
services made by Blockbuster three weeks ago.
The move to online subscriptions for posted DVDs is damaging the
traditional retail film rental business. Blockbuster this week
announced that it would close 282 shops in the US this year. It
closed 290 last year. It has 5,000 shops in the US and 3,000
elsewhere in the world.
