Broadcom late last week filed a patent infringement lawsuit against Netflix, and alleged that by using Broadcom’s patents to run its streaming infrastructure, Netflix has directly contributed to cord cutting and hurt Broadcom’s set-top box chipset business.
Broadcom alleged that Netflix infringed on eight different patents, which it said the company used to reliably deliver streaming content to consumers, encode content for different streaming devices and make efficient use of infrastructure and network resources.
“In doing so, Netflix has caused, and continues to cause, substantial and irreparable harm to the Broadcom Entities. For instance, the Broadcom Entities sell semiconductor chips used in the set top boxes that enable traditional cable television services,” the company wrote in its lawsuit. “…As a direct result of the on-demand streaming services provided by Netflix, the market for traditional cable services that require set top boxes has declined, and continues to decline, thereby substantially reducing Broadcom’s set top box business.”
Indeed, the traditional pay TV industry has seen dramatic subscriber losses in recent years and that may be due, at least in part, to the continued rise of subscription and ad-supported streaming services. The Leichtman Research Group calculated that the largest pay TV providers in the U.S. – representing about 95% of the market – lost about 4,915,000 net video subscribers in 2019.
The Broadcom patents in question cover technologies including dynamic load balancing on networks, systems and methods for processing data using networks and “Multiple Pathway Session Setup to Support QoS Services.” Broadcom said that Netflix uses these technologies to balance traffic in its content delivery network and to process audio and visual data during the process of building, using and selling its service to consumers.
Broadcom has asked the court to award damages “in an amount no less than a reasonable royalty for each asserted patent arising out of Netflix’s infringement of the Patents-in-Suit, together with any other monetary amounts recoverable.” The other monetary amounts could include attorneys’ fees and costs, exemplary damages and pre-judgment and post-judgment interest and costs.