Amazon, EULAs, and Orwell’s memory hole.

Can Amazon take back from y0ur Kindle a book you thought you’d purchased? Well, it did exactly that — Kindle owners who’d obtained ebooks of George Orwell’s 1984 and Animal Farm discovered last week that Amazon had simply deleted those books from their Kindles. No one seems to have known Amazon could do that — the fact the Kindle connects electronically to the internet has until now always been considered a reason the Kindle is better than competing ebook readers.

But did Amazon have the contractual right to do what it did?

The first thing to note is that you don’t “buy” ebooks from Amazon. As the Kindle’s End User License Agreement (“EULA”) states, you merely purchase a “license” to use the ebooks. The license is the right to use the ebooks under the terms of the EULA.

But does the EULA allow Amazon to unilaterally take back a book? I’m not so sure. I think likely Amazon is in breach. Nowhere in the agreement do I see any provision that gives Amazon the right to do what it did. Moroever, the EULA states that the license is one to keep a “permanent” copy of the text you are obtaining and to view, use, and display that text an “unlimited number of times”:

Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times.

The fact Amazon refunded the price of the Orwell books would not excuse its breach. You can’t enter a contract and then unilaterally tell the other side to the deal you want to undo it.

So Amazon may indeed be in breach. But does it matter? First, it would be difficult to prove any damage over and above the “purchase” price, which Amazon has refunded. But there are two more important points. First, as I’ve written before about EULAs, anytime you enter one online you are probably agreeing that the agreement can be amended at any time without even any notice to you. Amazon may simply argue that its recall of the books was an amendment of the agreement.

Second, what are you going to do, sue? You can’t. The EULA requires any dispute arising under it to be arbitrated in Seatlle! Are you going to go to the trouble of hiring a lawyer in Seattle to start an arbitration proceeding so that you might be able to recover a few more bucks? Of course not.

Actions like these are why class actions exist — where a company engages in actions that cause small amounts of damage to many people, it’s not worth any individual’s time or money to pursue a remedy, and even if it were the remedy is so small that the company’s gains from the improper conduct are worth it. As Wikipedia explains:

[A] class action may overcome “the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997) (quoting Mace v. Van Ru Credit Corp., 109 F.3d 388, 344 (7th Cir. 1997)). “A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.” Amchem Prods., Inc., 521 U.S. at 617 (quoting Mace, 109 F.3d at 344). In other words, a class action ensures that a defendant who engages in widespread harm – but does so minimally against each individual plaintiff – must compensate those individuals for their injuries. For example, thousands of shareholders of a public company may have losses too small to justify separate lawsuits, but a class action can be brought efficiently on behalf of all shareholders. Perhaps even more important than compensation is that class treatment of claims may be the only way to impose the costs of wrongdoing on the wrongdoer, thus deterring future wrongdoing.

But you can’t bring a class action in arbitration. That’s why all these EULAs require arbitration — so that there’s no opportunity for a class action that would impose on the company the real damages it would be liable for to all the people it has wronged by its conduct.

Pretty clever, eh? Just remember, when you push for “tort reform,” you’re really looking to benefit wrongdoers, not to right the defects of a “broken” litigation system.

ADDENDUM: Maybe there is hope after all – in Harris v. Blockbuster, a federal district court in Texas ruling under Texas state law refused to enforce an arbitration provision precisely because the contract provided a unilateral right to amend. I’ve got to research this point more, but it seems on its face to be consistent with Texas law. I see reason, though, to think it wouldn’t be under the law of many states. The court says the agreement to arbitrate is “illusory” because it can be amended without notice. I would think that in most states the un-amended contract would be enforceable and terms that were added by amendment MIGHT be deemed illusory.

New technology means the old ways of doing business won’t survive — how much longer will we have newsprint?

The ways changing reality forces change in the ways business is done: Nicholas Cohen wrote in January that it costs the New York Times “about twice as much money to print and deliver the newspaper over a year as it would cost to send each of its subscribers a brand new Amazon Kindle instead.” Cohen concludes that, “as a technology for delivering the news, newsprint isn’t just expensive and inefficient; it’s laughably so.” In taking down the pay wall to some its contentmaking Web, the Times recognzied that “site visitors pay for content would not bring in as much money as making it available for free and supporting it with advertising.” We’ll see what happens with the newsprint . . .

Stop those dangerous . . . er, player pianos!

Copyright legislation throughout history has primarily consisted of congressional efforts to preserve financial interests threatened by new technologies. We are, of course, living through a technological revolution right now, so we are living through copyright wars. 

But who knew the 1909 Copyright Act (in effect until the current one was enacted and signed into law in 1976) was a response to the threat posed by . . . yes, PLAYER PIANOS!

Music publishers, who had secured their rights in sheet music, were freaked out at the thought there might be mechanical reproductions of their music they wouldn’t be paid for. As Mike Masnick explains it at Techdirt

The big innovation of the 1909 copyright [Act] was compulsory licensing on mechanical rights. This was put into place for one reason: fear about player pianos and how they would dominate the market and destroy the need for musicians. Within a matter of decades, the player piano market was effectively gone… and yet, these massive changes designed solely to deal with the player piano have stuck around ever since. Now apply that same story to basically every other technological innovation, and that gets you copyright law.

You don’t have to look far to find a current example that proves Mike’s point.  Amazon’s Kindle2 ebook hit the market with the capacity to read the electronic texts loaded into it aloud in a computer-generated voice. As afterdawn reports, “the Author’s Guild saw this feature as a“performance” when used and pressured Amazon to allow publishers to decide on an eBook-by-eBook basis whether to enable the feature or not.” Whether this new technology represents a genuine threat to the existing financial interests of publishers and/or authors is pure speculation, but the Author’s Guild is adamant:

 We will not . . .  surrender our members’ economic rights to Amazon or anyone else. The leap to digital has been brutal for print media generally, and the economics of the transition from print to e-books do not look as promising as many assume. Authors can’t afford to start this transition to digital by abandoning rights.”  

Of course, the Authors Guild was the lead plaintiff in the lawsuit directed at shutting down a much vaster and more revolutionary technological advance, the Google Library Project.  As I have written, I never understood what good they possibly have been doing themselves if they’d stopped that project.  Nor can I understand their efforts to stifle the transition we plainly are going through into electronic books.  

But now I know: you see a machine that can reproduce your “property,” and all you can think is you’ve got to stop that machine.  Even if it is just a player piano.