Netflix, Inc. v. Blockbuster, Inc.

Filing 28

Netflix, Inc. v. Blockbuster, Inc.

Doc. 28 Att. 1

Case 3:06-cv-02361-WHA

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EXHIBIT A
Dockets.Justia.com

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111111111111111111111111111111111111111111111111111111111111111111111111111

US00702438IBI

(12) United States Patent
Hastings et aL.
(54) APPROACH FOR RENTING ITEMS TO CUSTOMERS
(75) Inventors: W. Reed Hastings, Santa Cruz, CA

(10) Patent No.: (45) Date of Patent:
5,861,906 A +
5,884,282 A 5,918,014 A

US 7,024,381 Bl
Apr. 4, 2006

1/1999 Dunn et al. ................. 725/87
3/1999 Robinson 6/1999 Robinson

(US); Marc B. Randolph, Santa Cruz,
c:A (US); Neil Duncan Hunt, Mountain View, CA (US)
(73) Assignee: Netfx, Inc., Los Gatos, CA (US)
( *) Notice:
Subject to any disclaimer, the term of

5,918,213 A 5,945,987 A + 5,959,945 A + 6,012,052 A

6/1999 Bernard et al.

8/1999 Dun ....................... 345/78
9/1999 Kleiman ...................... 381/81
1/000 Altschuler et ai.

(Continued)

FOREIGN PATENT DOCUMNTS
this
JP
2001243285 A 9/2001

patent is extended or adjusted under 35 U.S.C. 154(b) by 89 days.
(21) AppL. No.: 10/438,727

OTHER PUBLICATIONS

Kenton County Public Library, Covigton, KY 41011, The

Talkg Book Libra at the Kenton County Public Libra,
''htt://web.archive.orgweb/19980130051137/ww.kenton.1ib.ky.us/talkng.html," 3 pages. *

(22) Filed: May 14, 2003

Related U.S. Application Data
(63) Continuation of application No. 09/561,041, filed on Apr. 28, 2000, now Pat. No. 6,584,450.
(51)
Int. CL.

(Continued)

Primary Examiner-Andrew Joseph Rudy
(74) Attorney, Agent, or Finn-Hickman Palermo Truong & Becker, LLP

H04N 7/173 (2006.01)
(52) (58)

G06F 15/16 (2006.01) G06F 17/60 (2006.01)
U.S. Cl. ...................... 705/26; 381/77; 709/206;

(57)

ABSTRCT

725/60; 725/104 Field of Classification Search ................ 705/26;
709/206,212,219,222; 725/60,104; 381/77,
381/81, 86

According to a computer-implemented approach for renting items to customers, customers specifY what items to rent using item selection criteria separate frm decidig when to
receive the specified items. According to the approach,

customers provide item selection criteria to a provider
provides the items indicated by the item selection criteria to

See application file for complete search history.
(56)

customer over a delivery channeL. The provider may be
either centralized or distrbuted depending upon the requirements of a particular application. A "Max Out" approach
allows up to a specified number of items to be rented

References Cited
U.S. PATENT DOCUMNTS
5,095,195 A 3/1992 Hanan et 31. 5,664,110 A 9/1997 Green et 31. 5,704,017 A 12/1997 Heckenn et 31. 5,752,160 A + 5/1998 Dun ........................ 725/93 5,790,426 A 8/1998 Robinson 5,842,199 A 11/1998 Miller et 31.
60

simultaneousiy to customers. A "Max Tur" approach
allows up to a specified number of item exchanges to occur durg a specified period of time. The "Max Out" and "Max Tur" approaches may be used together or separately with
a varety of subscription methodologies.

51 Claims, 7 Drawing Sheets

\

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US 7,024,381 B1
Page 2

U.S. PATENT DOCUMENTS
6,016,475 A 6,029,161 A 6,041,311 A

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from http://web.archive.orglweb/19990908120905/www.

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Fastlane Vidoe & Records-Payment on Account (online)
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Blind Children and Adults, retreved from http://web. archive.orgwebl2oo00104114940/ww.actionfd.org
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ment.htm; I page. "Try Before You Buy Program" (online) retrieved from htt://web.archive.orgweb/l 9990922040420/ww. gametradersclub.comlgametradersclub/tryb.htm; 2 pages. Trade or Sell Your Games! (online) retreved from http:// web.archive.org/webI19991010012624/ww.
gametradersclu b.comlgametradersclu b/tradorselyou.html; 2

Librar for Blind-Children, last updated May 27, 1999,
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199911 03190509/ww.actionfd.orgjlib.htm. 3 pages.

pages.

"Try Before You Buy Program" (online) retrieved from
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utoronto.ca/fèonfincnally_fr.htm; 5 pages.

orgwebI19990508l40319/ww.audiodiversions.coml audiodiversions-cgilome.cgi; 2 pages.

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US 7,024,381 B1
Page 3

Welcome to Home Film (online) retrieved from http://web. archive.orgweb/I 9961 I 06000542/tt://www. homefilmfestival.comlindex.html; 3 pages.
Membership (olÙine) retrieved from http://web.archive.org
web19961 106001 054/ww.homefilmfestival.comlmember-

E-mail posting: Newsgroups: alt.games.video.sony-palystation from: ramon (ramon(itheriver.com) with subject: All the New Playstation Games are Yours for About a Buck a Day; Date: Feb. 10, 1999; 1 page. E-mail posting: Newsgrups: alt.games.video.sony-palysta-

ship.html; 2 pages. It's Easy! Ordering info (online) retreved from http://web. archive.orglweb/199611 0600 I 006/ww.homefilmfestival. comlinfopack.htm; 2 pages.
Online Video Rentals Multiple'Rental Order Form (online)

tion from: ramon (ramon(itheriver.com) with subject:
Check Out the New Web Site (Best Deal I've Seen); Date: Jul. 11, 1999; 1 page. E-mail posting: Newsgrups: alt.games.video.sony-palystation from: ramon (ramon(itheriver.com) with subject: How Many Games Can You Beat In A Month?; Date: Jul. 11,
1999; i page.
"ANew Way to

retrieved on Jul. 2,2003 from htt://web.archive.orgweb/ 19990420045928/ww.homefimfestival.coml1rgordr.htm;
3 pages. Online Video Rentals Individual Rental Orer (online)

Avoid Exercise", Newsweek Mar. 15, 1999;

1 page.

retrieved on Jul. 2, 2003 from htt://web.archive.orgweb/ 19990127160422/ww.homefilmfestival.comlindord.html;
3 pages.

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Mailbox

Access to Your Librar (MAYL), Florida Libraes,

Magic Disc Entertinment (online) retreved on Feb. 27, 2004 from http://web.arhive.orgwebI19981206142316/ http://ww.magicdisc.coml; 2 pages. Rental Progrm (online) retrieved from htt://web.arhive.
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archive.orgweb/l 99901 1701 l532/htt://ww.netflx.coml;

Unabashed Librarian, No. 82, p. 3 1991. Brass, Kevin, "Company Town: Rental Control; Video Distrbutor Takes Industry Down Controversial Path", Los Angeles TImes, Nov. 28, 1997; 4 pages. Mary L. Daniels, A Love for Libraes; Whether Lare or Small, They are Special Places, Edtorial; p. A19, Orlando Sentinel, Nov. 11, 1994; 2 pages.

DeJong, Jennifer, "Securng Your Site for the Age of ECo=erce", VAR Business Strategy Guide Supplement
Nov. 16, 1998; 3 pages. "Door-to-Door Service", High Points, Feb. 1999; vol. 6, No. 2, p. 50, 2 pages.
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5 pages. DVD Favorites, 1997-1999 copyright (online) retreved on Jul. 3, 2003 from http://web.arhive.orgweb/

19991204131346/ww.netfix.comls£.favorites.asp?sid=14;
4 pages.

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nfb.orgfr/frI/93win.htm; pp. 1-2; 70-72.

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Systems, Dec. 18, 1998; No. 18, voL. 11; p. 41; 2 pages. Hilda M. Hamlyn, "Eighteenth-century cirulating librares in England," The Library, pp. 197-222, Dec. 1946. Horowitz, Alan, S., "PC Leasing Gains Ground-Shorter
life spans poularze practice", Inormation Week; May 25,

1998,3 pages.
Ingrm, Bob, "Boston Bear Watching" Supermarket Busi-

ness Mar. 1, 1999; 5 pages.

subject: Need Cheep Games; Date: Feb. 7, 1999; 1 page. E-mail posting: Newgroups: alt.games.video.sony-playstalion from:ramon (ramon(itheriver.com) with subject: Need Cheep Games; Date: Feb. 8, 1999; 1 page (same page as
Esposito posting).

Kim, Nancy J., "Nordstrom seen Net gains with
Streaine", Puget Sound Business Journal Oct. 30, 1998; 2

pages. Alan Donald McKillop, "English circulating librares, 172550" The Librar, pp. 477:-485, Mar. 1934.

E-mail posting: Newgroups: alt.games.video.sony-playstation from:ramon (ramon(itheriver.com) with subject: ioo'S of Games for about a Buck a Day . . . (Incredible Deal);
Date: Feb. 6, 1999; 1 page.

Me=ott, Carol, "Web Site Streaines Your Errands",

E-mail posting: Newsgroups: alt.games.video.sony-palysta- . tion from: ramon (ramon(itheriver.com) with subject: Best Deal Around 100's of games for about a buck a day; Date;

USA Tody Nov. 16, 1998; 2 pages. "News Briefs", Video Store Mar. 21, 1999; 1 page. "Nordstrom Announces Partnership With Streamline", PR NewsWire Oct. 8,1998; 2 pages. Said, Carolyn, "Chips and Flicks On Your Doorstep", Business, p. BI, The San Francisco Chronicle, Oct. 18, 1999,4
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Shreves, Linda, "Now Librar Books Just Show Up at Your

Feb. 8, 1999; 1 page. ,
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day; Date: Feb. 8 1999; i page.

E-mail posting: Newsgroups: alt.games.video.sony-palystation from: raon (ramon(itheriver.com) with subject: Best

Deal Ever!! Choose from 100's of games for about a buck a day. . . Plus a Free Playstation; Date: Feb. 9, 1999; 1 page. E-mail postings of 6 messages in a thad from the following message: Newsgroups: alt.games.video.sony-palystation from: ramon (ramon(itheriver.com) with subject: Best Deal

Door", Orlando Sentinel, Dec. 7, 1990; 2 pages. "Streamline" DSN SuperCenter Club Business Mar. 29, 1999; 1 page. Hal R. Varian, "Buying, renting, and sharng information goods," Technical report, School of Information Management and Systems, UC Berkeley, Dec. 1994; 20 pages.
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Stores," Dec. 1996, retrieved from http://web.archive.org;
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Ever..AlI the N-64 Games You Want for About a Buck a Day; Date: Feb. 10, 1999; 3 pages.

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Page 4

Paperslhistoryllstory.html, Mar. 2000; pp. 1-13.

& Tom, Dick, & Harr and Chapter 13 The Rental Wars, pp.
168-202 (1987).

Griest, Guinevere L.: Mudie's Circulating Library and the
Victorian NoveL. Bloomigton and London, Indiana, Univ.

Press, 1970, 282 pages.
Books by Mail, a handbook/or libraries (1977) by Choong

Abigail A. Loomis, "Subscription librares," in Wayne A. Wiegand and Jr. Donald G. Davis, editors, Encyclopedia of
Libra History, pp. 608-610. Garland Publishing, Inc., New

H. Kim. In the Quebec section at p. 394, the McLennan Traveling Libraries 0/ McGil University were reviewed, 2
pages. James Lardner, Fast Forward: Hollywood, the Japanese and

York & London, 1994. Glenn Miler Customer Service & Innovation in Libraries
pp. 73-90, Highsmith Press 1996. ("Book").

the Onslaught o/the VCR by, Chapter 12 Wilbur & Orvile

* cited by examner

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FIG. 1
100

\
106

104

108

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FIG. 2

200

\

CUSTOMER CREATES ITEM SELECTION CRITERIA

204
CUSTOMER PROVIDES ITEM
SELECTION CRITERIA TO PROVIDER

PROVIDER PROVIDES ITEMS INDICATED BY

THE ITEM SELECTION CRITERIA TO CUSTOMER

210

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FIG. 3
300

\

302

DELIVER INITIAUNEX ITEMS TO CUSTOMR

NO

NO

YES

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FIG. 4
400

\

402
CUSTOMER AND PROVIDER NEGOTIATE TERMS OF

"MA TURNS" AGREEMENT

404

INITIAUEX ITEMS DELIVERED TO CUSTOMR

YES

CHANGE AGREEMENT
TERMS AND/OR

APPLY SURCHAGE

412

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FIG. 5
500

\
ANnEMS r:1:
, '- l-514
"-

/'//~----I ,/
L-

./

/

./

\

\

AN ITEMS
,/

r512

/' 514

/S

/'

502

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FIG.

6

600

\

602
CUSTOMER ENTERS INTO MOVIE RENTAL AGREEMENT

WITH PROVIDER

CUSTOMER PROVIDES MOVIE SELECTION CRITERIA

TO PROVIDER

NO

APPLY SURCHARGE

616

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Sheet 7 of 7

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US 7,024,381 B1
1

2
FIG. 3 is a flow diagrm depicting a "Max Out" approach for renting items to customers according to an embodiment.
FIG. 4 is a flow diagram depicting a "Max Turns"

APPROACH FOR RENTING ITEMS TO CUSTOMERS
RELATED APPLICATION AND PRIORITY INFORMATION
Ths application is a continuation of and claims benefit of

approach for renting items to customers according to an
embodiment.
FIG. 5 is a diagrm depictig an approach for renting

audio/video items to customers over the Internet according
to an embodiment.
FIG. 6 is a flow diagram ilustrating an approach for

U.S. Non Provisional application entitled "Method and
Apparatus for Renting Items", Ser. No. 09/561,041, filed

Apr. 28, 2000 now U.S. Pat. No. 6,584,450. The entire 10 renting audio/video items to customers over the Internet contents of ths prior application are hereby incorporated by using both "Max Out" and "Max Tur" according to an
reference in its entirety for all purposes.
embodiment; and

FIELD OF THE INVENTON
15

FIG. 7 is a block diagram of a computer system upon
which embodiments of the invention may be implemented.
DETAILED DESCRIPTION OF THE

The present invention relates to inventory rental, and more specifically, to an approach for renting movies to customers.

INON

BACKGROUN OF THE INVNTION
Conventional inventory rental models are typically based upon renting items for fixed rental periods and charging late fees for keeping rented items beyond a specified return date.

In the following description, for the purposes of expla20 nation, specific details are set forth in order to provide a
thorough understading of

the invention. However, it wil be apparent that the invention may be practiced without these specific details. In other instances, well-known structues and devices are depicted in block diagram form in order to These tyes of inventory models suffer from several signfi- 25 avoid unecessarily obscung the invention. cant limtations. First, conventional rental models require Varous aspets and featns of example embodiments of customers to make the decision of what items to rent at the invention are described in more detail hereinafter in the substatially the same time as the deision of when to rent following sections: (1) fuctional overview; (2) item selection criteria; (3) item delivery; (4) "Max Out"; (5) "Max the items. An example that illustrates ths limitation is a
video rental business. Customers go to a video rental store 30 Tur"; (6) inventory mangement; and (7) implementation

and select particular movies to rent at that time. The cus-

mechansms.

tomers take the movies home and must retu them by a

1. Functional Overview FIG. 1 is a block diagram 100 that ilustrtes an approach actually renting them. The customers may have a parcular 35 for renting items to customers according to varous embodiparicular due date or be chaged a late fee. In this situation, the customers cannot decide what movies to rent before

movie in mid, but there is no guarantee that the video rental store has the parcular movie in stock. Moreover, due dates
are inconvenient for customers, paricularly for "new

ments described herein. As used herein, the term "items"

refers to any commercial goods that can be rented to
customers. Examples of items include movies, music and
games store on a non-volatile memory such as a tape, other

release" movies that are generally due back the next day.

magnetic medium, optical medium, read-only memory or Given the current demand for inventory rental and the 40 the like, and the invention is not limited to any particular limitations in the prior approaches, an approach for renting type of item. In general, the decision of what items to rent items to customers that does not suffer from limtations is separated from the decision of when to rent the items.

associated with conventional inventory rental models is
what items to rent from when to rent the items is highly desirable.

highy desirble. In paricular, an approach for renting inventory items to customers that allows separtion of 45
customers' decisions of

Customers may specifY what items to rent using one or more

item selection criteria separate frm deciding when to
receive the specified items. Furtermore, customers are not
constrined by conventional rental "windows" and instead

can have continuous, serialized rental of items.

There is a fuer need for an approach for renting items According to one embodiment, a customer 102 provides to customers on a continuous basis that avoids the use of one or more item selection criteria to a provider 104 over a fixed due dates or rental "windows" appurenant to conven- 50 link 106. Link 106 may be any medium for transferrng data

between customer 102 and provider 104 and the invention is not limited to any paricular medium. Examples ofIink 106 include, without limtation, a network such as a LAN, WAN nient and flexible to customers than conventional 55 or the Internet, a telecommuncations link, a wire or optical approaches. link or a wireless connection.
There is yet a fuer need for an approach for renting

tional rental models.

movies, games and music to customers that is more conve-

BRIEF DESCRIPTION OF THE DRAWINGS

The item selection criteria indicate items that customer
102 desires to rent from provider 104. In response to

Embodiments of the invention are illustrted by way of example, and not by way of limitation, in the figures of the accompanying drwings and in which like reference numer-

receiving the item selection criteria from customer 102,
60 provider 104 provides the items indicated by the item

selection criteria to customer 102 over a delivery channel

als refer to similar elements and in which: mechansm or medium that provides for the transfer of items FIG. 1 is a diagram depicting an approach for renting. from provider 104 to customer 102 and the invention is not items to customers according to an embodiment. 65 limited to any paricular type of delivery channeL. Examples

108. Delivery chael 108 may be implemented by any

FIG. 2 is a flow diagrm depicting an approach for renting
items to customers according to an embodiment.

of delivery channel 108 include, without limitation, mail delivery, courier delivery or delivery using a delivery agent.

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US 7,024,381 B1
3
Provider 104 may be centralized or distributed depending upon the requirements of a particular application.
According to an embodiment, a "Max Out" approach
allows up to a specified number of items to be rented

4
According to one embodiment, a "Max Out" approach is used to manage the number of items that may be simultaneously rented to customers. According to the "Max Out" approach, up to a specified number of items may be rented

simultaneously to customer 102 by provider 104. According 5 simultaneously to a customer. Thus, the "Max Out" to another embodiment, a "Max Turs" approach allows up approach establishes the size of an inventory of items that to a specified number of item exchanges to occur durng a may be maintained by customers. The specified number of specified period oftime. The "Max Out" and "Max Turns" items may be specific to each customer or may be common approaches may be used together or separately with a variety to one or more customers. In the present example, if the 10 specified number of items is the, then up to thee items of subscription methodologies. The approach just described for renting items to custommay be rented simultaneously by provider 104 to customer ers is now described with reference to a flow diagrm 200 of 102. If the specified number of items are curently rented to FIG. 2. Afer starting in step 202, in step 204, customer 102 customer 102 and the specified item delivery cri teria trggers creates item selection criteria. ln step 206, customer 102 the delivery of one or more additional items, then those provides the item selecion criteria to provider 104. In step 15 items are not delivered until one or more items are returned 208, in response to provider 104 receiving the item selection by customer 102 to provider 104. criteria frm customer 102, provider 104 provides one or According to one embodent, in situations where the more items indicated by the item selection criteria to cusspecified number of items are curently rented to customer tomer 102. The process is complete in step 210. 20 102 and the specified item delivery criteria trggers the delivery of one or more additional items, then the one or 2. Item Selection Criteria more addtional items are delivered to customer 102 and The one or more item selection criteria provided by customer 102 and a surhare is applied customer 102. The customer 102 to provider 104 indicate the paricular items specified number of items may then be increased thereafter that customer 102 desires to rent from provider 104. Thus, 25 to reflect the additional items delivered to customer 102 and the item selection criteria defie a customer-specific order increase the size of the inventory maintained by customer queue that is fulfilled by provider 104. According to one
embodiment, the item selection. criteria specifY attbutes of

102. Alterntively, the specifed number of items may

tomer 102 retned to the prior level after items are retued 30 to provider 104 by customer 102. When used in conjunction the invention is not limted to particular item attrbutes. with the "Max Tur" approach described hereinafter, the Examples of item attbutes include, without limtation, specified number of items may be unimted.

items to be provided by provider 104 to customer 102. Item selection criteria may specif any ty of item attbutes and

remain the same and number of items maintained by cus-

identifier attbutes, tye attributes and cost attbutes. Item selection criteria may be chaged at any tie to reflect

The "Max Out' approach for managing the number of
items that may be simultaeously rented to customers is now 35 described with reference to a flow diagram 300 of FIG. 3.

changes in items tht customers desire to rent from a

provider.

Afer starting in step 302, in step 304, one or more intial
items are delivered to customer 102 to establish the inven-

3. Item Delivery

Accordig to one embodiment, items are delivered by
provider 104 to customer 102 over delivery chanel 108 based upon item delivery criteria. More specifically, the

tory maintained by customer 102. Note that an initial delivery of items is not required and according to one embodi40 ment, the inventory of customer 102 is incrementally
established over time.

delivery of items from provider 104 to customer 102 is
trggered by item delivery criteria being satisfied. The item delivery criteria may include a wide range of criteria and the

In step 306, a determnation is made whether the item

delivery criteria have been satisfied. If not, then the deterinvention is not limited to any particular item delivery mination continues to be made until the item delivery criteria. Examples of item delivery criteria include, without 45 criteria are satisfied. As described previously herein, the limitation, customer request/notification, customer notificadelivery criteria may include customer notification genertion that an item is being retued, customer retu of an ally, customer notification that an item is being returned, the item, the occurrence of a specified date, the elapsing of a actual return of an item, the occurrence of a specific date, or specified period of time or a customer payment. that a specified amount of time has elapsed. The item delivery criteria may be specified by customer 50 Once the item delivery criteria are satisfied, then in step 102 to provider 104 or negotiated by customer 102 and 308, a determination is made whether the specified number provider 104 as par of a subscription service. For example, of items have been delivered. If not, then control retuns to a paricular subscription service may include item delivery step 304 and one or more additional items are delivered by criteria that specifies that a particular number of items are to provider 104 to customer 102. If however, in step 308, the be delivered monthy. As another example, item delivery 55 specified number of items have been delivered, then in step criteria may specify that an intial set of items is to be 310, a determnation is made whether the specified number delivered by provider 104 to customer 102 upon initiation of of items, i.e., the "Max Out" limt, is to be overridden. As a subscription service and that additional items are to be previously described, the specified number of items may be delivered to customer 102 upon return of items to provider overridden by increasing the specified number of items, i.e., 104. Item delivery criteria may be applied uniformy to all 60 the "Max Out" limit, to allow additional items to be delivitems to be delivered to a customer, or may be item specific. For example, item delivery criteria may specifY a paricular

ered to customer 102 and charging a fee to customer 102.

Alternatively, the specified number of items is not changed
and a surcharge applied to customer 102. Ths process

date, i.e., the third Wednesday of every month, for all item deliveries. Alternatively, separate item delivery dates may be
assigned to each item.

65 complete in step 312.

continues for the duration of the subscription and is then

4. "Max Out"

5. "Max Tunis"

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US 7,024,381 B1
5
According to one embodiment, a "Max Turns" approach is used to rent items to customers. According to the "Max
Turs" approach, up to a specified number of item

6
tion payment made by customer 102 to provider 104, the initiation of a specified subscription period, or by request of customer 102 for the initial rental items. The number of intial one or more items must not exceed the terms of the "Max Turns" agreement. In step 408, in response to one or more delivery criteria
being satisfied, a determation is made whether additional

exchanges may be performed during a specified period of time. For example, referrng to FIG. 1, suppose that provider 104 agrees to rent items to customer 102 with a "Max Turns"
limit of three

items per month. Ths mean that customer 102

may make up to thee item exchanges per month. Ths
approach may be implemented independent of

the number of

items can be provided to customer 102 within the terms of the "Max Turns" agreement. For example, if the number of

items that a customer may have rented at any given time 10 items rented to customer in the current subscription period under the "Max Out" approach. The approach is also indeis less than the agreed-upon "Max Turs," then additional pendent of the paricular item delivery criteria used. items can be rented to customer 102 within the term of the Accordig to one embodiment, the "Max Turn" approach "Max Turs" agreement. In ths situation, ths determnation

is implemented in combination with the "Max Out"

may be made in response to customer 102 retug one or

approach to rent items to customers. In ths situation, up to 15 more items to provider 104, or by customer 102 requesting a specified number of total items are simultaneously rented additional items. to customer 102 and up to a specified number of item If, in step 408, a determnation is made tht additional exchanges may be made during a specified period of time. items can be rented to customer 102 within the terms ofthe Thus, using the "Max Out' and the "Max Turs" approaches "Max Tur" agrement, then control retu to step 406 together essentially establishes a personal item inventory for 20 where one or more additional items are rented to customer customer 102 based upon the "Max Out" limt that may be 102. Ifhowever, in step 408, a determination is made that periodically refreshed based upon the "Max Turs" limt additional items cannot be rented to customer 102 with the
selected.

terms of the "Max Turs" agreement, then in step 410, a
determination is made whether to overrde the cuent agreechaged to allow for a larer number of

In some situations, customer 102 may wish to exchange
period. According to one embodiment, in this situation, provider 104 agrees to rent additional items above the specified number to customer 102 and to charge customer
102 for the additiona items. For example, suppose that

more th the specified number of items durg a specified 25 ment terms. If so, then in step 412, the agreement terms are
terms and customer 102 is charged accordingly, or the terms are left unchanged

and a surcharge is applied for the additional items to be

delivered. Control then returns to step 406, where one or provider 104 agres to rent items to customer 102 with up to 30 more additional items are delivered to customer 102.
thee item tus (exchanges) per month. If, in a parcular

If in step 410, a determation is made that the curnt

month, customer 102 requires two additional tuns, then the

agreement is not to be overrdden, then in step 414, no items two additional items are provided to customer 102 and a are delivered to customer 102 until the next subscription surcharge is applied to customer 102 for the additional two period. For example, the request for additional items may be items. 35 received at the end of a subscription period and instead of In other situations, customer 102 may not use all of its renting the additional items immediately, they are instead
allotted tus durg a specified period. According to one embodiment, customers lose unused tus durng a subscripdelivered durg the subsequent subscription period. Control

then retus to step 406 where one or more additional items

tion period. For example, if customer 102 has a "Max Tur" ar rented to customer or the process is complete in step 416. limit of four item exchanges per month and only makes two 40 The approach for renting items described herein is now item exchanges in a parcular month, then the two unused described in the context of renting to customers audio/video exchanges are lost and cannot be used. At the start of the (AI items, such as movies, games and music, stored on next month, customer 102 would be entitled to four new various media. FIG. 5 is a diagrm 500 that depicts a set of item exchages. customers 502 that desire to NY items from a provider 504. According to another embodiment, customers ar allowed 45 Customers 502 communicate with provider 504 over lins to car over unused tus to subsequent subscription peri506, the global packet-switched network referred to as the ods. For example, if customer 102 has a "Max Turs" limit "Internet," and a link 510. of four item exchanges per month and only makes two item Links 506 and 510 may be any medium for trnsferrng

exchanges in a particular month, then the two unused
exchanges, two from the prior month and four for the current month. The "Max Turn" approach for renting items to customers

data between customers 502 and the Internet 508 and
present example, lins 506 and 510 may be connections

exchanges are lost and caDDot be used. At the start of the 50 between the Internet 508 and provider 504, respectively, and next month, customer 102 would be entitled to six new item the invention is not limited to any partcular medium. In the
provided by one or more Internet Service Providers (ISPs) and customers 502 are confgured with generic Internet web 55 browsers. Links 506 and 510 may be secure or unsecured depending upon the requirements of a paricular application. In accordance with an embodiment, customers 502 enter into a rental agreement with provider 504 to rent audio/video (NV) items 512 from provider 504 according to the "Max

is now described with reference to a flow diagram 400 of
FIG. 4. After starting in step 402, in step 404, customer 102 and provider 104 agree upon the term of the "Max Turns"

agreement. Specifically, customer 102 and provider 104 agree at least upon the maximum number of tuns that are

allowed in a specified period of time. GO Out" and/or "Max Turns" approaches described herein. The In step 406, in response to one or more item delivery invention is not limted to any particular approach for

criteria being satisfied, provider 104 provides one or more entering into the rental agreement. For example, customers items to customer 102 over delivery chanel 108. Any type 502 and provider 504 may enter into a rental agreement by of item delivery criteria may be used with the "Max Turns" mail, telephone or over the Internet, by customers 502 approach and the invention is not limited to any paricular 65 logging into a web site associated with provider 504. delivery criteria. For example, the initial one or more items Customers 502 create and provide item selection criteria may be delivered to customer 102 in response to a subscripto provider 504 over links 506 and 510 and the Internet 508.

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US 7,024,381 B1
7
The invention is not limited to any paricular approach for specifYing and providing item selection criteria to provider 504. For example, according to one embodiment, customers 502 provide item selection criteria to provider 504 in one or more data files. According to another embodiment, custom-

8
four movies and rent four new movies per month. Thus, the paricular customer 502 can completely "replace" his personal inventory once per month. If the paricular customer

502 agreed to a maximum of up to eight turs per month,
then the particular customer 502 would be able to completely replace his personal inventory twice per month. Provider 504 is illustrated as a single entity for puroses of explanation only. Provider 504 may be centrlized or

ers 502 log onto a web site of provider 504 and use a
graphical user interfaced (GUI) to specifY attbutes of the

movies and music that customers desire to rent from provider 504.

distrbuted depending upon the requirements of a paricular The item selection attributes may include any attributes 10 application. For example, provider 504 may be a centrl that describe, at least in par, movies, games or music that warehouse from which all NY items 512 are provided. customers 502 desire to rent. For movies, example attbutes Alternatively, provider 504 may be implemented by a.netinclude, without limitation, title, category, diector name, work of distrbuted warehouses. actor name and yea of release. For .games, example FIG. 6 is a flow diagram that ilustrates an approach for attributes include, without limtation, title and category. For 15 rentiug NY items 512, e.g., movies, to customers over a music, example attributes include, without limitation, title, communications network such as the Internet using both category, artist/group name and year of release. Customers "Max Out" and "Max Turns" according to an embodiment. 502 may identifY specific movies or music by the item Referrg also to FIG. 5, after staring in step 602, in step selection criteria, or may provide varous attbutes and 604, .a customer 502 enters into a rental agreement with allow provider 504 to automatically select parcular movies 20 provider 504. In the present example, customer 502 uses a and music that satisfy the attrbutes specified. For example, generic web browser to access an Internet web site associ-

customers 502 may specif item selecion criteria that
include horrr movies released in 1999 and let provider 504 automatically select horror movies that were release in 1999.

ated with provider 504 and enter into a rental agrement that

specifies that customer 502 may maintain a personal inventory of four movies ("Max Out" of four) and receive up to As another example, customers 502 may specifY item selec- 25 four new movies per month ("Max Tur" of four). Furthertion criteria that include adventue movies starg Harson more, the rental agreement specifies that new movies wil be Ford. Customers 502 may also specifY an order or priority delivered upon return of a rented movie from customer 502, for the specified item selection criteria. For exaple, cusi.e., the delivery criteria is a ret of a movie by the tomers 502 may specfY specific movie titles and the order customer. in which they want to receive them. As another example, 30 In step 606, customer 502 creates and provides movie customers 502 may specifY tht they want to reeive a selection criteria to provider 504 that indicates movies tht parcular number of movies of different tyes. customer 502 desires to rent. For example, the movie Once customers 502 and provider 504 have entered into selection criteria may specifY particular movie titles tht a rental agreement and customers 502 have provided item customer 502 desires to rent. The movie selection criteria selection criteria to provider 504, then NY items 512 are 35 may also specifY an order or priority in which customer 502 rented to customers 502 over delivery chaels 514 in wishes to rent the movies. Instead of identifYing paricular
accordance with the terms of

the rental agreement. Specifi-

movie titles, the movie selection criteria may specifY movie

cally, according to the "Max Out" approach described herein, an initial set of NY items 512, such as movies,
agreement. Subsequent NY items 512

preferences for customer 502, e.g., tyes of movies, directors, actors, or any other movie preferences or attibutes. In

games and music, are delivered to customers 502 over 40 this situation, provider 504 automatically selecs parcular delivery channels 514 accordig to the term of the rental titles that satisfY the movie selection criteria. For exaple,
ar delivered when-

the movie selection criteria may specifY a preference for
action movies starng a particular actor, with a preference

ever the specified item delivery criteria ar satisfied. For example, additionaliVV items 512 may be delivered upon

for "new release" movies. Provider 504 attempt to provide

the retur of one or more NY items 512 to provider, a 45 movies to customer 502 that best satisfY the preferences
request from customers 502, the arrval of a paricular date, indicated by the movie selection criteria. e.g., a specific day of the month, or the expiration of a In step 608, one or more intial movies 512 are delivered specified period of time, e.g., fifteen days. to customer 502 over delivery channel 514. The one or more In accordance with the "Max Out" approach described initial movies 512 may be delivered to customer 502 via herein, once the maximum number of NY items 512 have 50 mail, courier, delivery agent or any other suitable means been rented to a particular customer 502, then no additional negotiated between customer 502 and provider and the NY items 512 are rented until one or more rented AN items invention is not limted to any parcular type of delivery 512 are returned to provider 504, or uness a surhare is mechansm. For purpses of explanation only, is presumed applied to the paricular customer 502. Alternatively, the in the present example that movies are mailed between rental agreement between the particular customer 502 and 55 customer 502 and provider 504. provider 504 may be modified to increase the maximum The one or more initial movies 512 establish the personal number of NY items 512 that may be rented simultaneously movie inventory of customer 502. Customer 502 may to the paricular customer 502. choose to receive any number of movies up to the "Max The rental agreement between customers 502 and proOut" limit of four movies. Typically, customer 502 wil vider 504 may also specifY a maximum number of turns in 60 choose to initially receive four movies in the initial delivery.
combination with the "Max Turns" approach. In ths situa-

Once the one or more initial movies 512 have been mailed

tion, a maximum number of turs restricts how quickly to customer 502, then in step 610, a determnation is made customers 502 may refresh their NY item 512 inventories. whether any movies 512 have been retured by customer For example, suppose that a particular customer 502 agrees 502 to trigger another movie delivery. In the present with provider 504 to rent up to four movies with a maximum 65 example, the delivery of additional movies is triggered by of four turs per month. Under this agreement, the parcular the receipt, e.g., via mail, of one or more movies from customer 502 may maintain a personal inventory of up to customer 502. In the situation where customer 502 elects to

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US 7,024,381 B1
9 not receive the maximum number of movies 512 in the
initial delivery, then the delivery of additional movies 512
may also be trggered by a request from customer 502 for

10
wilIe ensuring that customers 502 are able to rent the
highest priority items tht they requested. According to another embodiment, as yet unown items may also be rented by specifying attrbutes of the unkown

additional movies 512. For example, customer 502 may

items. For example, the particular customer 502 may request notify provider 504 via telephone, email or by accessing the to rent the next new movie of a paricular director, for which web site associated with provider 504. the exact nae is unown to the particular customer. As If, in step 610, a determnation is made that one or more another example, the paricular customer 502 may request to movies 512 were received from customer 502, then in step rent the next album of a paricular group that is currently in 612, a determination is made whether the maximum number 10 process and does not yet have a title. of turns ("Max Turns") limit has been reached for the current cycle. In the present example, a determation is made 7. Implementation Mechanisms whether four or more movies have been mailed in the current The approach described herein for renting items to cusmonth. If not, then control returns to step 608, where one or tomers is applicable to any type of rental application and more additional movies 512 are mailed to customer 502 via (without limitation) is particularly well suited for Internetdelivery channel 514 up to the "Max Out" limit of four. 15 based rental applications for renting movies and music to If, in step 612, a determnation is made that the "Max customers. The invention may be implemented in hardware

Turs" limit has been met for the curent cycle, i.e., in the present example, four movies 512 have been mailed to
determation is made whether to overrde the curent "Max

ciruitry, in computer softare, or a combination of hard-

ware circuitr and computer software and is not limted to a

customer 502 in the curent month, then in step 614 a 20 paricular hardware or softare implementation.

Turs" limit. If so, then in step 616, a surharge is applied
to customer 502 and control retu to step 608 where the

FIG. 7 is a block diagrm that illustrates a computer
system 700 upon which an embodient of the invention may be implemented. Computer system 700 includes a bus
702 or other communcation mechasm for communicating

additional movies 514 ar mailed to customer 502. If not,
continue the subscription service. If so, then no additional
movies are mailed to customer 502 durg the currnt cycle,

then in step 618, a determnation is made whether to 25 inormation, and a processor 704 coupled with bus 702 for

processing inormation. Computer system 700 also includes
a main memory 706, such as a radom access memory

e.g., the curnt month, and the control retus to step 610.

If, in step 618, a determination is made tht service is not to for storig information and instructions to be exected by be continued, then the process is complete in step 620. 30 processor 704. Main memory 706 also may be used for In some situations, customer 502 may desire to increase storig temporary varables or other intermediate inormaor decrease the size of customer's 502 personal movie tion durig execution of instrctions to be executed by inventory by chaging the currnt "Max Out" limt. Accordprocessor 704. Computer system 700 further includes a read only memory (ROM) 708 or other static storage device ing to one embodiment, customer 502 notifies provider 504, e.g., by telephone, mail, email or by accessing the web site 35 coupled to bus 702 for storig static information and instrcassociated with provider 504, tht customer 502 wishes to tions for processor 704. A storage device 710, such as a change the "Max Out" limit. The movie rental agreement magnetic disk or optical disk, is provided and coupled to bus 702 for storing information and instructions. between customer 502 and provider 504 is then modified to reflect the change of the "Max Out" limit. In the sitution Computer system 700 may be coupled via bus 702 to a where the "Max Out" limit is increased, then additional 40 display 712, such as a cathode ray tube (CRT), for displaying movies 512 may be imediately mailed to customer 502. inormation to a computer user. An input device 714, including alphanumeric and other keys, is coupled to bus 702 for 6. Inventory Management communicating information and command selections to The approach described herein for rentig items to cusprocessor 704. Another type of user input device is cursor tomers provides superior inventory management to prior 45 control 716, such as a mouse, a trckball, or cursor direction approaches. Specifically, the use of item selection criteria keys for communicating direction information and comprovides for effcient inventory management by allowing the mand selections to processor 704 and for controlling cursor gratest number of items to be rented at any given time. movement on display 712. Ths input device typically has Moreover, the greatest number of customers are provided two degrees of freedom in two axes, a fist axis (e.g., x) and with their most preferred items. For example, customers 50 a second axis (e.g., y), that allows the device to specif' may specify priorities for the items indicated by the item positions in a plane. selection criteria. Thus, if a paricular customer's fist choice The invention is related to the use of computer system 700 is not available, or already rented, then the item having the for renting items to customers. According to one embodinext highest priority can be rented to the particular customer. ment of the invention, the renting of items to customers is According to one embodiment, customers may indicate 55 provided by computer system 700 in response to processor items that are not yet available for rent. Then, the items are 704 executing one or more sequences of one or more delivered to customers when they become available. instrctions contained in main memory 706. Such instrc-

(R or other dynamic storage device, coupled to bus 702

For example, referrng again to FIG. 5, suppose that a

tions may be read into main memory 706 from another

paricular customer 502 desires to rent an as-yet-unreleased computer-readable medium, such as storage device 710. movie entitled "ABC." The particular customer 502 indi- 60 Execution of the sequences of instrctions contained in main cates this movie to provider 504 by the item selection memory 706 causes processor 704 to perform the process criteria. Since the movie ABC is not yet available, it cannot steps described herein. One or more processors in a multibe delivered to the paricular customer 502. However, when processing arrangement may also be employed to execute the movie ABC does become available, it can be shipped the sequences of instructions contained in main memory immediately to the paricular customer 502, as well as other 65 706. In alternative embodiments, hard-wired circuitry may customers 502 who may have also requested the movie. Ths be used in place of or in combination with software instrcallows provider 504 to maximize the number of items rented tions to implement the invention. Thus, embodiments of the

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US 7,024,381 B1
11
invention are not limited to any specific combination of
hardware circuitr and software.

12
which cany the digital data to and from computer system
700, are exemplar forms of carrer waves transportg the

The term "computer-readable medium" as used herein refers to any medium that participates in providing instrctions to processor 704 for execution. Such a medium may take many forms, including but not limited to, non-volatile
media, volatile media, and transmission media. Non-volatile media includes, for example, optical or magnetic disks, such as storage device 710. Volatile media includes dynamc
ing the wires that comprise bus 702. Transmission media can

inormation. Computer system 700 can send messages and receive data, including program code, through the network(s), net-

work lin 720 and communication interface 718. In the Internet example, a server 730 might trnsmit a requested code for an application progrm though lnternet 728, ISP
726, local network 722 and communication interface 718. In

memory, such as main memory 706. Transmission media lO accordance with the invention, one such downloaded application provides for the renting of items to customers as includes coaxial cables, copper wire and fiber optics, includdescribed herein.
The received code may be executed by processor 704 as it is received, and/or stored in storage device 710, or other t5 non-volatile storage for later execution. In this maner, tions. computer system 700 may obtain application code in the Common forms of computer-readable media include, for form of a carrer wave. example, a floppy disk, a flexible disk, hard disk, magnetic The novel approach described herein for renting items to tape, or any other magnetic medium, a CD-ROM, any other customers provides several advantages over prior optical medium, punch cards, paper tape, any other physical medium with patterns of holes, a RA, a PROM, and 20 approaches for renting items to customers. First, the decision of what items to rent may be separated from the decision of EPROM, a FLASH-EPROM, any other memory chip or when to rent the items. Customers may specifY what items cardge, a carrer wave as described hereinafter, or any to rent using the item selection criteria and receive the items other medium from which a computer can read.

also take the form of acoustic or light waves, such as those generated during radio wave and infrared data communca-

involved in carring one or more sequences of one or more
instrctions to processor 704 for execution. For example, the

Various forms of computer readable media may be 25 to pick up the items. The selection critena may be user
specific and may indicate a desired fulfillment sequence. Furermore, customers are not constrained by conventional

at a futue point in time, without having to go to the provider

instrctions may intially be carried on a magnetic disk of a due dates and instead may establish contiuous, serialized remote computer. The remote computer can load the instrcrental strams of items. The approach also allows more tions into its dynamc memory and send the instrctions over 30 effcient inventory mangement. a telephone line using a modem. A modem local to computer The "Max Out" approach for inventory management system 700 can receive the data on the telephone line and allows users to maintain their own inventory of items that use an infrared transmitter to convert the data to an infrared are periodcally replaced by other items according to specisignL. An inrared detector coupled to bus 702 can receive
35 another item to a customer are very flexible and may be bus 702. Bus 702 cares the data to main memory 706, frm tailored to the requirements of a particular application. For which processor 704 retrieves and executes the instrctions. example, as described herein, the event criteria may include The instrctions received by main memory 706 may optionally be stored on storage device 71 0 either before or afer

the data cared in the inared signal and place the data on

fied event criteria. The event criteria that trgger sending

a retu of any of the items curently in use by the customer

execution by processor 704.

or merely customer notification. Ths is very convenient in

inventory management, when used alone or in combination network link 720 that is connected to a local network 722. with "Max Out," provides even greater flexibility for cusFor example, communication interface 718 may be an 45 tomers and providers. The max number of turns can be integrted services digital network (ISDN) card or a modem selected individually for particular customers depending to provide a data communication connection to a correupon their particular needs. sponding type of telephone line. As another example, comThe "Max Out" and "Max Turs" approaches provide muncation interface 718 may be a local area network great flexibility in establishing subscription models to sat(LAN) card to provide a data communication connection to 50 isfY the needs of a particular application. Specifically, the a compatible LAN. Wireless links may also be implemented. size and replacement frequency of customer inventones can
In any such implementation, communication interface 718 sends and receives electrical, electromagnetic or optical
types of information.

Computer system 700 also includes a communication interface 718 coupled to bus 702. Communcation interface 718 provides a two-way data communication coupling to a

40 the context of movie rentals since a the return of a movie to
the provider automatically trggers the sending of another

movie to the customer. The "Max Tur" approach for

be tailored to each customer with individualized subscription plans.

signls that carry digital data streams representing vanous
Network link 720 typically provides data communication

In the foregoing specification, the invention has been

55 described as applicable to an implementation anticipating
Internet based ordering and mail or other long-distance

though one or more networks to other data devices. For
example, network link 720 may provide a connection

delivery of the items, where the special advantages of the
method are very attactive. However the same invention may

through local network 722 to a host computer 724 or to data be applied in a more conventional video, games, or music equipment operated by an Internet Service Provider (ISP) 60 rental-store setting, where subscription customers may be 726. 1SP 726 in turn provides data communication services allowed rentals of a specified number of movies, games, or
though the world wide packet data communcation network
music selections at any time, and/or in one subscription
period, without rental return due dates,

now commonly referred to as the "Internet" 728. Local

in exchange for a

network 722 and Internet 728 both use electrical, electrmagnetic or optical signals that car digital data streams. 65

periodic rental subscription fee.
In the foregoing specification, the invention has been

The signals through the various networks and the signals on network link 720 and through communication interface 718,

described with reference to specific embodiments theref. However, varous modifications and changes may be made

Case 3:06-cv-02361-WHA

Document 28-2

Filed 07/26/2006

Page 19 of 20

US 7,024,381 B1
13
thereto without deparing from the broader spirit and scope of the invention. The specification and drawings are, accordingly, to be regarded in an ilustrative sense rather than a restrictive sense.
The invention claimed is: 1. A computer-implemented method for renting movies to

14
establishing, in electronic digital form, from electronic digital informtion received over the Internet, a movie rental queue associated with a customer comprising an ordered list indicating two or more movies for renting to the customer;
causing to be delivered to the customer up to a specified

customers, the method comprising: providing electronic digital information that causes one or more attributes of movies to be displayed; establishing, in electronic digital form, from electronic 10 digital information received over the Internet, a movie rental queue associated with a customer comprising an ordered list indicating two or more movies for renting to the customer;
causing to be delivered to the customer up to a specified 15

number of movies based upon the order of the list,
wherein the customer is not required to retu the

movies within a specified time associated with delivery;

number of movies based upon the order of the list;
in response to one or more delivery criteria being satis-

fied, selecting another movie based upon the order of the list and causing the selected movie to be delivered to the customer; and in response to other electronic digital information reeived from the customer over the Internet, electronically updating the movie rental queue. 2. A computer-implemented method as reited in claim 1,
wherein updtig the movie rental queue comprises chang-

in response to one or more delivery criteria being satisfied, selecting another movie based upon the order of the list and causing the selected movie to be delivered to the customer; and in response to other electronic digital information received from the customer over the Internet, electronically updating the movie rental queue. 15. A computer-implemented method as recited in claim
14, wherein updating the movie rental queue comprises

20 chaging the order of

the two or more movies for renting to

the customer.

16. A computer-implemented method as recited in claim
14, wherein updating the movie rental queue comprises

25 indicating an additional movie in the ordered list.

ing the order of the two or more movies for renting to the customer. 3. A computer-implemented method as recited in claim 1, wherein updating the movie rental queue comprises indicat-

17. A computer-implemented method as recited in claim

14, wherein updating the movie rental queue comprises

removing an indication of one or more of the movies from the ordered list.
30

ing an additional movie in the ordered list.
4. A computer-implemented method as recited in claim 1,
wherein updting the movie rental queue comprises remov-

18. A computer-implemented method as recited in claim

14, wherein the two or more movies for renting to the
customer are selected by the customer.

19. A computer-implemented method as recited in claim 14, fuer comprising determg the order of the two or ordered list. 5. A computer-implemented method as recited in claim 1, 35 more movies based upon one or more preferences of the customer. wherein the two or more movies for renting to the customer 20. A computer-implemented method as recited in claim are selected by the customer. 14, wherein the delivery of the selected movie comprises 6. A computer-implemented method as recited in claim 1,

ing an indication of one or more of the movies from the

fuer comprising determning the order of the two or more
movies based upon one or more preferences of the customer. 40

delivery by maiL.

7. A computer-implemented method as reted in claim 1, wherein the delivery of the selecte