A court in Germany has recently ruled that Netflix Inc. has been infringing on a Broadcom Inc. patent related to video coding, according to a statement released by Broadcom Inc. The District Court of Munich has issued an injunction that requires Netflix to “cease and desist” all further infringements of the patent within Germany.
Broadcom’s stock (AVGO) slipped 0.4% in premarket trading, while Netflix shares (NFLX) gained 0.6%. The increase in Netflix shares coincides with the recent agreement reached by the Hollywood writers’ union, which has given a boost to streaming video provider stocks.
According to Mark Terrano, the general manager of Broadcom’s intellectual property and licensing division, “Netflix has built a robust video streaming business that relies on Broadcom’s patented technology to deliver content to its users, and Broadcom is pleased to see this recognized by the German court.”
This patent dispute between Broadcom and Netflix dates back to 2018, with Broadcom accusing Netflix of infringing on multiple U.S., German, and Dutch patents as part of its video streaming services provision.
On September 19, the German court ruled that Netflix is infringing on the “366 Patent through its transmission of HEVC (high-efficiency video coding) video,” which Netflix employs to provide Ultra HD content to its users. The financial terms of the court ruling were not disclosed in Broadcom’s release.
Year to date, Netflix’s stock has rallied 28.8%, while Broadcom shares have seen a significant increase of 48.3%. In comparison, the S&P 500 index has advanced 12.5%.