Why Is NetFlix Suing Blockbuster?

Online DVD service NetFlix has filed for an injunction seeking to stop Blockbuster from continuing its online DVD rental service. The company says Blockbuster is violating its patent for operating a Net-based DVD rental service, including the use of the term "queues" to describe the list of films people want to rent.

Legal experts differ over whether NetFlix's claim has merit. Some argue that NetFlix is essentially saying that its patents cover any DVD rental service, which, of course, would be absurd. Patents protect innovation, not monopolies.

However, it's undeniable that Blockbuster's online service is remarkably similar to NetFlix in tone and design.

But that begs an interesting question: Why did NetFlix wait 18 months after Blockbuster launched the service before filing its suit? My guess (and more than an educated one) is that NetFlix had been talking with Blockbuster about a possible merger, but the negotiations went south. Consequently, NetFlix now feels that it needs to take legal action to curb a rival.

I suspect that the NetFlix-Blockbuster battle has just begun, whether you're talking about the courtroom or the marketplace. And it's still possible that the two companies will eventually join as one. If you recall, EchoStar sued DIRECTV several months before the two companies agreed to a merger four years ago. (The merger was eventually rejected by the Federal Communications Commission.)

Often, lawsuits are more about the future than the past.