Netflix (NSDQ: NFLX) disclosed this afternoon that it will pay to settle nationwide claims that it illegally retained customers’ rental histories. (Updated with Netflix statement)

Where will this all end? Both Apple (NSDQ: AAPL) and Google (NSDQ: GOOG) are sitting on billions in cash and seem intent on blowing a good part of it on lawyers.

Copyright clouds are gathering around Pinterest. And that could make the dreamy image site an unlikely successor to other innovators—from Grokster to the Beastie Boys—who walked a fine legal line between sharing and theft.

Universal Pictures put a lot of palms on foreheads this week when it announced that its summer comedy hit Bridesmaids has taken in $40 million so far across cable and internet VOD platforms. Certainly, it’s a big performance—long-entrenched entertainment data tracker Rentrak christened it the biggest VOD haul ever, while Steve Savage, co-president of New Video, a leading-edge distributor to digital channels, called the number “extraordinary.” But, perhaps, the bigger news was the fact that Universal was releasing any VOD number at all.

Since Penguin announced yesterday that it is ending its partnership with OverDrive and will no longer provide e-books or digital audiobooks to libraries, it’s become clear that OverDrive’s relationship with Amazon (NSDQ: AMZN) played a part in the decision.

Apple’s global campaign to stop its Korean rival from selling smartphones and tablets has faltered in recent months, but the iPhone-maker appears undeterred.

Apple (NSDQ: AAPL) is using two new patents for touchscreen technology, obtained in December, as the basis for yet another lawsuit.

Some of the stories people are talking about this morning:

»  Apple (NSDQ: AAPL) vs. Google: The stakes are rising (WSJ)

»  Amazon (NSDQ: AMZN) adds Clinton alum Jamie Gorelick to board (paidContent)

»  Amazon: No plans to launch a standalone video service soon (GigaOM)

»  Penguin ends e-book library lending and relationship with OverDrive (paidContent)

»  Advice for Patch’s new content chief (Street Fight)

Amazon (NSDQ: AMZN) is adding a power presence in the other Washington and a corporate governance advisor to its board: Jamie Gorelick, who served as deputy attorney general during the Clinton administration. According to an SEC filing, Gorelick was elected to the board Thursday.

Three months of library drama are coming to a climax this evening as big-six publisher Penguin announced that it is ending its relationship with digital library distributor OverDrive. Starting tomorrow, it will stop offering e-books and digital audiobooks to libraries—at least until it finds a new partner.

Users are downloading more e-books, music, TV shows and movies than ever: Digital content and subscriptions were the fastest-growing retail e-commerce category in 2011, according to a new ComScore (NSDQ: SCOR) report.

Microsoft (NSDQ: MSFT) has cleared up some of the confusion regarding its plans for Windows 8 computers that will use ARM processors, the first time the storied company has built a version of its flagship Windows PC operating system for the chip standard that dominates the mobile world. Windows 8 devices on ARM chips will be able to run a version of Microsoft Office in an operating mode that resembles older versions of Windows, but all other applications aimed at those devices will have to be designed for Microsoft’s new Metro user interface.

Last year, it became clear that Facebook is well on its way to becoming a social operating system underlying our digital lives.  And the enhanced Facebook Open Graph makes that vision a reality. 

After quickly gaining a warm reception and a rapid post-launch investment from BSkyB, the social TV app startup co-founded by ex BBC iPlayer head honcho Anthony Rose is making its first real play at monetisation.

It would be dramatic to say that independent booksellers nationwide are boycotting Amazon (NSDQ: AMZN) Publishing titles en masse—and hey, it could still happen. But a new decision from the American Booksellers Association’s IndieCommerce—which comes as bookstore chains Barnes & Noble, Books-A-Million and Indigo are making similar decisions—is not so far-reaching.