Back in April 2006, online DVD rental service Netflix filed a suit alleging Blockbuster was infringing a patent related to its methods for online home video rental orders, attempting to put a stop to the rapid growth of its biggest rival. Blockbuster countersued shortly after, claiming Netflix violated antitrust laws.
On Wednesday, home-video rivals Blockbuster and Netflix quietly announced they have finally settled their patent dispute out of court. Terms of the settlement were kept confidential. However, some are worried about the secrecy surrounding the settlement, claiming that the two rivals may have reached a "sweetheart agreement" that may stifle competition.
U.S. District Judge William Alsup refused to oversee the settlement because Netflix and Blockbuster wouldn't provide him with a copy of the agreement. "We are very concerned," Scott Kamber, a New York lawyer said Wednesday. "One thing is for sure: This isn't going to be good for consumers if they don't want this settlement to see the light of the day."
Netflix remains the larger service, with 6.8 million subscribers. Nonetheless, Blockbuster has seen substantial growth since November, when it introduced a plan called "Total Access" that gives its online subscribers the option of returning DVDs to a store instead of the mail to obtain another movie more quickly, bumping its subscriber base to 3 million in March.