Netflix Sues Broadcom’s VMware Over Virtual Machine Patent Infringement

Broadcom completed its much anticipated purchase of VMware for $69 billion in November last year. The move was delayed thrice but the acquisition positions the technology giant at the forefront of private and hybrid cloud environments, making them more secure and resilient.

More recently, VMWare revealed that it was making two of its popular desktop hypervisor products, VMware Fusion and VMware Workstation, available for all users free of cost. The plan is available for commercial, educational and personal users from November 11, 2024.

The acquired business now finds itself in the middle of a major legal case, with streaming giant Netflix accusing it of violating several patents related to virtual machines. Netflix is suing Broadcom's VMware, having filed a case in the U.S. District Court for the Northern District of California.

So, what’s the dispute all about and what does it mean for VMWare? Learn more!
 

What Is The Netflix-Broadcom Lawsuit?

According to Netflix, VMware's products, such as vSphere and VMware Cloud Foundation, violated five patents that cover important virtual machine technologies. The five patents in question allow for smarter use of CPU resources, smooth virtual machine operations and novel load balancing features, all vital to modern cloud computing systems.

Netflix alleges that VMware has been aware of the breach of contract since 2012, when one of Netflix's products was used in VMware's patent application process. The streaming giant calls the infringement "willful and deliberate" as VMware is using Netflix’s patented technologies despite knowing about it.

The lawsuit alleges that cloud services for Amazon Web Services, Microsoft Azure and Google Cloud use VMware's vSphere Foundation. Hence, VMWare has been using copyrighted patents without Netflix’s permission for over a decade now.

Netflix is seeking monetary damages from Broadcom, VMware's parent business. So, does Netflix have a valid case?
 

What Are Netflix’s Allegations?

The roots of this case trace back to 2018, when Broadcom filed a lawsuit against Netflix, claiming the streaming platform infringed on Broadcom’s video streaming patents. This earlier lawsuit remains unresolved and spans multiple jurisdictions, including the U.S., Germany and the Netherlands.

Reports say that Broadcom went to court against Netflix which grew quickly during the COVID-19 pandemic, affecting demand for Broadcom's TV set-top box chips as cable orders dropped. However, Broadcom has a history of suing companies aggressively over patents, having gone after LG, MediaTek, Vizio and others over similar patent issues.

This makes Netflix’s case stronger as Broadcom has been accused of trying to skirt patent laws. Neither Netflix nor Broadcom has said anything about the case publicly, as the case is in its early stages.

With legal experts and technology business closely watching, how will it affect the broader virtualization landscape?
 

How Does This Affect Virtualization?

Virtual machine technologies are essential to cloud computing as they allow multiple operating systems to run simultaneously on a single physical server. The case could have a say on the licensing fair use of virtualization technologies and a lot could change with this case.

A negative decision would affect VMware's business and that of its clients using the patented software to run data centers and cloud environments. Lawyers think that the decision could also set a precedent for technological intellectual property rights.

Broadcom's U.S. lawsuit against Netflix is scheduled to go to trial in June 2025. Till then, Netflix’s counter-suit may not make much headway.
 

Conclusion

Although direct statements from Netflix and VMware are pending, some analysts suggest this case highlights the growing friction between software innovation and intellectual property claims.

Legal experts believe that the lawsuit underscores the importance of robust patent portfolios in the competitive technology landscape. Businesses must tread carefully to avoid unintentional infringements that may affect reputation, clients and customers.

Do you think Netflix’s lawsuit against Broadcom will reshape the virtualization technology landscape?

Let us know in the comments below!