You’ve probably seen the headlines, but the actual drama between Netflix and Broadcom—specifically involving their subsidiary VMware—is way more intense than a standard corporate disagreement. It’s basically a high-stakes chess match involving billions of dollars, decades-old patents, and a healthy dose of "legal revenge."
Honestly, when Netflix sues Broadcom VMware, it’s not just about some obscure code. It’s a massive counter-strike in a war that has been raging since 2018.
The Counter-Strike: Why Netflix Sued VMware
On December 23, 2024, Netflix decided to play its hand. They filed a lawsuit in the Northern District of California, alleging that Broadcom’s VMware is infringing on five of Netflix’s patents.
These patents aren't about streaming Stranger Things. They focus on the nitty-gritty of virtual machine (VM) communications and resource allocation. Specifically, the suit targets VMware’s vSphere platform—the backbone of how many massive corporations manage their cloud infrastructure.
What exactly are they fighting over?
Netflix is claiming that VMware’s tech, which allows one computer to act like multiple separate systems (virtualization), uses Netflix’s intellectual property.
- The 424 and 707 Patents: These deal with how a computer’s brain (the CPU) attributes work within a virtual environment.
- The 891 Patent: This one is all about monitoring how much power those virtual machines are actually using.
- The vSphere Factor: Netflix alleges that major cloud solutions like Azure VMware Solution and Google Cloud VMware Engine are using this "stolen" tech.
Broadcom didn’t take this sitting down. They’ve called the move "meritless" and "retaliatory." And to be fair, they have a point. This lawsuit didn't happen in a vacuum.
A Six-Year Grudge: The Backstory
To understand why Netflix sues Broadcom VMware today, you have to look back at what Broadcom did first.
Since 2018, Broadcom has been chasing Netflix across the globe. They sued Netflix in the U.S., Germany, and the Netherlands. Their argument? That Netflix’s entire streaming empire was built on Broadcom’s patented video-coding technology (specifically the HEVC/H.265 standard).
Broadcom’s stance was almost petty: they claimed Netflix was so successful at "cord-cutting" that it destroyed Broadcom’s traditional business of selling chips for cable set-top boxes. Essentially, they wanted a "success tax" from the streaming giant.
The 2025 Turning Point
By early 2025, the tide started to turn. While Broadcom initially won some battles—including a €7.05 million fine against Netflix in Germany—higher courts began dismantling Broadcom’s claims.
- December 2025: The German Federal Court of Justice officially invalidated Broadcom’s core video-coding patent (EP 366).
- Dutch Dismissal: Two days later, a court in The Hague threw out another Broadcom claim, saying there just wasn't enough evidence that Netflix was doing anything wrong.
So, when Netflix sued VMware, they weren't just defending themselves. They were hitting Broadcom where it hurts: their $61 billion acquisition of VMware.
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The Strategy: "Taste of Their Own Medicine"
There is a certain irony here that IT nerds find hilarious. The patents Netflix is using to sue VMware were actually originally filed by HP back in 2005. Netflix bought them up and is now using them to attack a company (Broadcom) that itself is a descendant of an HP spin-off (Agilent/Avago).
It’s the ultimate "I’m using your own history against you" move.
Netflix isn't typically known as a "patent troll." They usually contribute to open-source tech. But Broadcom’s aggressive litigation forced their hand. By suing VMware, Netflix creates leverage. If Broadcom wins a few million from Netflix on streaming patents, Netflix can turn around and demand a few hundred million from VMware’s massive enterprise business.
Why This Matters for the Rest of Us
You might think, "Who cares if two giants fight in court?" But this stuff ripples down.
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Broadcom has been under fire recently for radically changing VMware’s pricing models—some customers saw their costs jump by 600% or more after the acquisition. If Netflix wins or forces a settlement, it adds even more pressure to a company that is already facing a massive backlash from its own user base.
Also, if these virtualization patents are upheld, it could change how cloud providers like Amazon (AWS) or Google Cloud operate their VMware-based services. It might get more expensive for everyone.
Actionable Insights for IT Leaders
If your company relies on VMware or Broadcom tech, you can't just ignore these legal fireworks.
- Diversify Your Cloud Strategy: Don't put all your eggs in the VMware basket. The "Broadcom effect" is making licensing unpredictable. Look at open-source alternatives like KVM or Proxmox if you’re running on-prem.
- Audit Your Licensing: Broadcom is currently aggressive with audits. Ensure you aren't over-provisioned or using features that aren't covered under the new subscription-only models.
- Watch the "Alice" Rulings: Many of these patents are being challenged under the "Alice" standard, which basically says you can't patent an "abstract idea." If the courts decide these VM patents are too abstract, the whole case could vanish.
The Netflix vs. Broadcom saga is far from over. With trials scheduled throughout 2026, we’re likely to see more "retaliatory" filings before anyone decides to shake hands and settle.
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For now, just keep an eye on your cloud bills. When the giants fight, it's usually the customers who end up paying for the broken glass.
Next Steps to Secure Your Infrastructure:
- Review your VMware contracts immediately to identify any clauses Broadcom might use to hike rates during this litigation period.
- Evaluate Nutanix or Microsoft Hyper-V as potential fail-safes if the legal pressure on VMware leads to further service instability or price spikes.
- Consult with legal counsel if you are a major cloud provider utilizing vSphere to ensure you have indemnity protections against these specific Netflix-held patents.