Found this article on Yahoo! Finance. It will be interesting to see what the result of this is. I'm a big fan of NetFlix, but I'd hate to see them drive their competitors out of business. I think their service has gotten much better lately and felt that increased competition was the reason. Netflix says granted patent on DVD rental service Tuesday June 24, 1:25 pm ET By Ben Klayman CHICAGO, June 24 (Reuters) - Netflix Inc. (NasdaqNM:NFLX - News) said on Tuesday the U.S. Patent & Trademark Office issued the company a patent that covers its online subscription-based DVD rental service, but it has not decided what action to take against rivals in the growing market. Shares in the Los Gatos, California-based company rose as much as 11.5 percent in early trading. Analysts said the increase was likely due to eased investor concerns about the sustainability of Netflix's business in light of the patent. "This would give everybody the impression that there's ... some level of protection of future cash flows to the company," said Delafield Hambrecht analyst R.J. Jones, who has a "hold" rating on Netflix stock. "For the near term, this provides a way for them to defend against competition." Jones, who does not own stock in the Netflix and whose firm does not do banking for the company, said Netflix will likely take some action against competitors, whether it be lawsuits to drive them out of business or seeking royalties. Netflix filed its request for a patent for its business process in 2000, he said. A Netflix spokeswoman said the company has not contacted competitors, including Wal-Mart Stores Inc. (NYSE:WMT - News) and Blockbuster Inc. (NYSE:BBI - News), and has not decided whether to pursue legal action. "We have not decided on what the next step is," Netflix spokeswoman Lynn Brinton said. "We are focused simply on executing in the market place, where we feel the battle for market leadership is going to be won." Netflix's options include suing for patent infringement, licensing the patent to rivals or doing nothing, said Michael Epstein, a New York City intellectual property attorney. A likely defense of any rival would be the obviousness of the process, Jones said. Netflix also could pursue action against small rivals first before turning to Wal-Mart and Blockbuster, he added. Netflix is the leading U.S. online DVD renter, commanding about a 95 percent share of the market. It makes its money by charging a monthly fee and directly shipping DVDs to customers, who make their choices on the Internet. A Wal-Mart spokesman said the Bentonville, Arkansas-based company was unfamiliar with the patent grant. It first outlined its push into the hotly contested DVD segment last fall. Analysts have seen Netflix as particularly vulnerable to the world's largest retailer, whose size and scale could give it more clout. It charges almost $19 a month to rent as many DVDs as customers like but no more than three at once. Netflix, launched in 1998 and sporting more than 1 million subscribers, allows customers to rent as many DVDs as they want for the monthly fee, with three movies out at a time. Customers can keep the DVDs as long as they like and they are delivered directly to the subscriber's address via first-class mail. A spokesman for video rental chain Blockbuster said the Dallas-based company had not seen the patent and declined to comment immediately. It purchased a DVD rental company last year and relaunched it as filmcaddy.com in the fourth quarter. Stock in Netflix rose as high as $23.98 in early trading and was still up $1.61, or 7.5 percent, at $23.1 in afternoon trading on the Nasdaq.