Judge Tosses Antitrust Case Against Netflix

CompetitionLaw360

A federal judge has thrown out a putative antitrust class action against Netflix Inc. two months after the plaintiffs decided not to amend their dismissed consolidated complaint that alleged the online DVD rental service restrained competition by fraudulently obtaining two patents. Judge William Alsup dismissed the suit, along with two related cases, in the U.S. District Court for the Northern District of California on October 22, 2007 after the plaintiffs submitted to the court a “sufficient” plan for giving notice to potential class members.

The judge had held off on dismissing the case out of concern for some absent class members that may have delayed filing their own actions because they were awaiting the outcome of the current action, which was brought by a putative class of Netflix subscribers. The plaintiffs responded that they gave notice of the pending dismissal to journalists who have been covering the case.

The plaintiffs decided not to continue with the present proceedings after Wal-Mart Inc. and Amazon Inc. claimed the patents at issue did not play a role in their business decisions, which threw the plaintiffs' theory of the case into grave doubt, according to court documents. A crucial component of the plaintiffs' theory was that Netflix had protected unenforceable patents in order to keep companies, including Wal-Mart and Amazon, from entering the Internet rental market, thus reinforcing its alleged monopoly. The patents in question disclosed a method for instituting into “wish list” and “no late fees” features.