Technically Legal

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Amazon Breaches Kindle User Contracts

Amazon recently deleted copies of 1984 by George Orwell from both Kindles and the Kindle store.

The Kindle User License Agreement clearly states:

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, solely on the Device. . .

So Amazon is pretty clearly in breach of their contract to Kindle users who purchased the book, as Amazon did not allow them to keep a permanent copy of the book on their device. However, the License Agreement goes on to disclaim any liability for breach of the contract, and requires confidential arbitration to resolve any disputes you have with Amazon over the device.

Look for more on this over the weekend.

Posted in: Analysis, Links by Ben Snitkoff.

8 Comments on “Amazon Breaches Kindle User Contracts”

  1. Dave says:

    I was under the impression if they disclaimed all legal remedy for breach of contract, then the promise itself was illusory.

    I promise to give you a book if you promise to pay me $10, and to not sue me if I breach.

    Sounds like a pretty clear illusory promise. There must be something else to it.

  2. ben says:

    It’s an interesting argument, but my feeling is that the contract isn’t illusory. An illusory contract is one where the parties don’t actually satisfy the elements of a contract. This is usually a lack of consideration, or promises, on both sides of the bargain.

    An example would be something like a contract where you agree to sell me as many canoes as I order in any given month for $500/canoe.

    The contract there is illusory because I’m not actually making any promise to buy anything. This is different from a requirements contract, where the quantity isn’t stated, but there is a promise of some order a month, and there is a promise for exclusivity, that I won’t buy canoes elsewhere.

    This may seem a little illusory, but were I to pay them $10 and not get anything in return, while I couldn’t sue for breach, I could still (probably) get either the money back or the book under a theory of unjust enrichment. There are also other elements in the contract, Amazon agrees to provide internet service, and the user agrees not to reverse engineer for instance.

    The contract, or specific provisions, may be found to be unconscionable, but (and I’m not 100% on Washington State Contract law) unconscionability usually requires both substantive and procedural unconscionability. The substantive unconscionability would be that there are no remedies for breach, but procedural unconscionability usually has to be shown by vastly different bargaining positions, and usually some element of coercion, in that there were no other choices available to the person in the lesser position.

  3. david says:

    We will be covering this story in more detail on this weekend’s podcast, if you’re interested.

  4. steve says:

    Note that it disclaims only “incidental” or “consequential” damages for breach.

    I believe this means you would still have a claim for expectation or reliance damages or other theories of recovery. Could you get specific performance? Highly unlikely as it requires arbitration, but a court acting under its equitable power might imply an irrevocable license. In fact the language in Amazon’s agreement describes an irrevocable license, especially considering you paid value for it (a classic requirement of irrevocable licenses):

    Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy… display such Digital Content an unlimited number of times, … Digital Content will be deemed licensed to you by Amazon under this Agreement unless otherwise expressly provided by Amazon.”

  5. ben says:

    Good catch Steve, I misread the comma, reading it as no liability for incidental damages from breach of warranty, and no damages for breach.

  6. david says:

    I doubt specific performance would be applicable in the case of a license such as this. It’s usually only viable in cases where performance of the contract is so unique that damages would be an inadequate remedy for breach. Since this is a license for limited use and possession, and not a transfer of title, other damages would probably suffice a claimant.

    There might be some room for colorful arguments as to why performance should be compelled; but, it feels thin to me.

    Good points.

  7. john says:

    if amazon didn’t have the copyright or valid license to distribute the books, as they claim, then the contract is void for illegal subject matter……….don’t overthink this one.

    • ben says:

      Thanks for the comment John.

      First thing I want to get out, Amazon hadn’t explained why they did this at the time we posted this. That we did not mention it then was a factor of us now knowing it.

      Second, and more to your legal argument, is that it’s a tad more complicated. For one, there may only be one contract here, the EULA, which is certainly not void for illegal subject matter. The EULA provides for the purchase of content from the Kindle store, so there may not be new contracts formed by subsequent purchases.

      Even if there are two contracts, the EULA and the contract for sale, then only the contract for sale would be void for illegal subject matter. The first contract, the EULA is valid and breached by the removal of the book from the Kindle.

      A failure to obtain a license is often a exception for contracts for illegal subject matter (though, from what I understand that’s more common in a building situation than in IP). Also, if the plaintiff doesn’t know of the illegality (as was true here) then that’s an exception.

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