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A California judge dismissed a consumer class action against online DVD rental company Netflix Inc. that accused the company of inflating prices through fraudulently obtained patents, but opened the door to future claims by allowing limited discovery and the option for an amended complaint. In the June 14 dismissal, Judge William Alsup rejected the plaintiffs’ ]antitrust claims because they hadn’t demonstrated that Netflix tried to enforce its patents against rivals. The patent enforcement component is a key part of claims under the Walker Process legal theory, which is based on a 1965 U.S. Supreme Court ruling that said companies’ enforcement of fraudulently obtained patents could violate Sherman Antitrust Act anti-monopolization rules. In re Netflix Antitrust Litigation, No. 07-00643 (N.D. Calif.). “To plead a claim of Walker Process fraud, plaintiffs must plead that the fraudulently-procured patent was enforced,” wrote Judge Alsup. “Merely procuring a patent by fraud is not sufficient.” Scott A. Kamber of New York-based Kamber & Associates, the plaintiffs’ co-lead counsel on the Netflix antitrust case, said the judge’s order took a “pragmatic approach.” “We look forward to seeing the materials that are provided and making a decision based on all information we have available to us,” Kamber said. In the ruling, Judge Alsup said the plaintiffs’ argument that Netflix’s patent infringement lawsuit against Blockbuster deterred other companies from entering the market is not enough to show enforcement. Since the plaintiffs’ complaint noted Amazon.com Inc.’s decision not to enter the U.S. online DVD rental business after an announcement and Wal-Mart Stores Inc.’s short lived venture into the market, the judge’s discovery order involves those two companies. Judge Alsup ordered Netflix to disclose by July 2 all documents concerning its oral or written communications with Amazon and Wal-Mart about the patents in question from the date they were issued to the date the Netflix complaint was filed. An Amazon.com spokeswoman said the company doesn’t comment on litigation matters. Wal-Mart did not immediately respond to a request for comment. Alsup also said plaintiffs have until July 16 to file an amended complaint. A Netflix lawyer on the antitrust case, Keith Eggleton of Wilson Sonsini Goodrich & Rosati in Palo Alto, Calif., declined to comment. A company spokesman didn’t return a call requesting a comment on the order.

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