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Summary:

Amazon has won a patent to create a virtual marketplace where users could resell digital content like apps, songs and ebooks. But it’s unclear whether such a marketplace would be legal under current copyright law.

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photo: Flickr / Tracy O

Amazon has won a patent for an “electronic marketplace” where users can resell digital content. The company had filed for the patent in 2009 and it was awarded on January 29, 2013.

GeekWire first reported the news. Here’s the description of the patent:

Digital objects including e-books, audio, video, computer applications, etc., purchased from an original vendor by a user are stored in a user’s personalized data store. Content in a personalized data store may be accessible to the user via transfer such as moving, streaming, or download. When the user no longer desires to retain the right to access the now-used digital content, the user may move the used digital content to another user’s personalized data store when permissible and the used digital content is deleted from the originating user’s personalized data store. When a digital object exceeds a threshold number of moves or downloads, the ability to move may be deemed impermissible and suspended or terminated. Additionally or alternatively, a collection of objects may be assembled from individual digital objects stored in the personalized data stores of different users, and moved to a user’s personalized data store.

Users’ rights to resell digital content is already a contentious issue under copyright law. Startup ReDigi, which allows users to resell digital music, says its model is legal according to U.S. copyright law’s “first sale” doctrine, which lets people resell physical content. But the record label EMI is suing ReDigi, claiming that digital files can’t be resold like physical objects because there is no way to ensure that the “original” digital file was deleted. A court will rule on the case this year, and the outcome could have implications for Amazon’s marketplace.

Amazon’s patent for this marketplace is likely to muddy the legal waters even further. If the patent is as broad as it seems, Amazon could theoretically bar ReDigi and everyone else from offering a resale market in the first place. The company, after all, has spent years in court fighting to own the right to “one-click shopping” based on a 1999 patent.

As for the “electronic marketplace” patent itself, Amazon appears to take account of copyright owners’ concerns. The patent outlines a system to “maintain scarcity” of content: “a threshold may limit how many times a used digital object may be permissibly moved to another personalized data store, how many downloads (if any) may occur before transfer is restricted, etc….These limits may be set for a specific digital object, a digital object type (such as a particular title of book), a digital object category (such as all movies), etc….Alternatively, a user’s ability to access the used digital object by streaming may also be limited upon the occurrence of certain events.” It’s not clear, though, how the system would ensure that a user hadn’t stored a copy of the file somewhere other than his or her “personalized data store.”

  1. Very interesting. The attempt to apply non digital cotent rules to digital content seems to be a very uncomfortable fit and one that seems to try to pull digital content back into the world of non digital content. I think that we are only at the beging point of understanding how digital content consumption could possibly evolve. Also a bit distributing is the fact for amazons redistribution scheme to work the content will need to be encased in an Amazon drm scheme.

    1. “is the fact for amazons redistribution scheme to work the content will need to be encased in an Amazon drm scheme.” < we know this how, exactly?

  2. Probably to be taken in the context of Verge story today about AMZN coming up with its own “Coins” for online purchasing – sounds like it starts out at least as a closed system for exchange of AMZN’s digital products.

    1. That’s an interesting thought — note that Amazon applied for the patent in 2009 before Amazon Coins were around, though…but it’s interesting to think how virtual currency could be used in a marketplace like this. (Amazon is also likely to face copyright lawsuits if it sets up this marketplace.)

      1. The only thing that changes that landscape Laura is the introduction of unique identifier quantifying each digital representation of a digital work. Amazon may be tying up its platform tight enough to rollout that kind of capability and usher in a used content ecosystem that either assuages copyright holders or works around current copyright enforcement!

        Amazon rarely does anything accidentally.

    2. Emmett McAuliffe Albin Friday, February 8, 2013

      “Sounds like it starts out at least as a closed system for exchange of AMZN’s digital products.” <how is an "Amazon digital product" different from an "Apple digital product" or "Google digital product"? do the Lumineers sound better on Amazon?

      My point is: There is no reason it can't be an "open system" very quickly. I ought to be able to exchange my "Apple digital product" for my "Amazon digital product". They are all fungible commodities. That would be be like saying that I can only buy stocks of General Motors" from one brokerage house, and then I can only exchange them with buyers who use brokers from that same house.

  3. I hate to pick on poor defenseless little Amazon, but my understanding is that the digital versions of my books are licensed to readers, not owned by them. A physical book, yes, you own it. But not the digital one. Will Amazon pay me another royalty when it licenses that book again?

    1. no, just like with music, amazon is reselling the license to use the book, same as you theoretically. All you are selling is permission to use your creative works, so all amazon is RE-selling is someone elses permission to use your creative works.

  4. This is absurd. Like reselling something/anything is a new, original, creative or unique. Are they nuts?

  5. Stephanie Lehmann Wednesday, February 6, 2013

    If Amazon would be keeping track of these digital re-sales, wouldn’t it make sense for authors to get royalties from them? Oh, sorry, I was in a dreamworld.

    1. There is no earthly reason for authors not to get paid on every resale … and I hope it happens. But right now, the people to whom they unwisely assigned their copyright, are seemingly stuck on the idea that resales are “bad” and the best way for the industry to make $ is to make users pay over and over for the same content. Like with music: first vinyl, then cassette, then CD, then Spotify. Voila … you just got hoodwinked into buying Born to Run four times!

      But as you seemingly realize Stephanie, there is much more potential money in a central, frictionless resale system. Market pricing, making “full ownership” no longer the province of physical units lessens the need for brick and mortar … the efficiencies go on and on…

  6. Amazon can encapsulate digital content with DRM to turn them into physical objects. The user then can resell the digital right to use the content and eliminate the multiple copies problem

  7. The abstract or written description of a patent tells you exactly NOTHING about what is actually patented and can be infringed.Only the claims spell out exactly what is patented.

    Reporters often make this mistake. On November 16, the New York Times ran a piece by reporter Nick Bilton that declared in a sensational headline that “Apple Now Owns the Page Turn.”

    In that piece, reporter Nick Bilton wrote that a new Apple design patent “gives Apple the exclusive rights to the page turn in an e-reader application.”

    He obviously got that by reading the abstract or written description of the patent and jumped to conclusions.

    Had he even read the Wikipedia entry on design patents, however — which is something any 5th grader would have likely done if writing a paper on the subject — he would have learned that design patents are granted only for NON-FUNCTIONAL ornamental designs.In fact, a design patent is invalid if its ornamental features are mainly functional.

    What Apple actually “owns,” in fact, is not the functional concept of the “page turn” but merely the particular ornamental design of the way a page turn is executed in their devices, as specified in the patent’s claims.

    What does the Amazon patent you’re writing about specify in its claims? I’m willing to bet Amazon doesn’t claim the whole concept of a “market in second-hand digital goods,” but rather some very specific means of conducting such a market over the Internet.

    Which means any other new, useful, and non-obvious means of conducting such a market can also be patented by others (and indeed other methods have been patented by others).

    Just as new and more efficient ways of doing all kinds of other things — from new ways of shifting gears in an automatic transmission to new ways of transmitting cellphone signals — are also constantly being invented.

    What do the Amazon claims actually say?

  8. By the way, the “first-sale” doctrine in copyright law limits the rights of authors to only the first sale of a copy of their work. After that, stores and individuals are free to resell it, as well all know from visiting garage sales.

    1. Not according to the provisions of DMCA – this isn’t a physical piece of anything – The first-sale doctrine was shot down in 2010 by the U.S. Supreme Court – Vernor v. Autodesk, Inc.
      In May 2008, a federal district judge in Washington State dismissed Autodesk’s argument that the software’s license agreement preempted the seller from his rights under the first-sale doctrine.[15] In September 2010, the US Court of Appeals for the Ninth Circuit reversed, holding that “a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.” [16]

      1. What if I tell Amazon, “Hey Amazon, instead of sending me that CD I just ordered, go ahead and keep it in your fulfillment center, but turn on my access to the rips”.

        Anyway, it’s not altogether clear that the DMCA bans digital reselling. And even if it does, the DMCA was written 16 years ago. Do you think Tip O’Neill, Jesse Helms and the boys were really on top of the digital reselling issue?

        Does it make sense to keep pressing physical CDs and DVDs, just to serve as a “token” of physical purchase that sits til kingdom come in an Amazon fulfillment center somewhere, just to satisfy Jesse Helms and Tip O’Neill?

  9. You’re absolutely right, Nevea Lane — but only where software is concerned. And it was an appeals court, not the Supreme Court, that shot down the idea of first-sale doctrine rights and ruled in Autodesk’s favor — but again, only and specifically in the sale of software.

    The precedent for this, of course, goes back to the Computer Software Rental Act of 1990, which prohibited individual purchasers of software from subsequently renting, leasing, or lending that software to others for commercial gain. Individuals, however, could still make personal copies for their own use, and libraries were permitted to lend software.

  10. Rowena Cherry Friday, February 8, 2013

    First sale rights do not apply to e-books, because e-books are content, and an author does not sell the copyright to her work for somewhere between $0.00 and $9.99.

    If she did, one person could purchase an ebook and publish and distribute that one copy millions of times for less than the contracted minimum selling price on a legal ebook-retailing site.

    I’ve not seen this reference to a “threshold” number of resales, before. Does this mean that, not only will Amazon allow one illegal resale of ebooks, but multiple illegal resales without the consent and without compensation to the copyright owner? Will Amazon determine how many times an e-book can be resold?

    Not every e-book that Amazon has “sold” has been legally “sold” by Amazon, and many authors have not been paid even for the first “sale” of e-books sold by Amazon. Moreover, would ebooks given away as a free, limited time promotion also be eligible for “resale”?

    1. “Moreover, would ebooks given away as a free, limited time promotion also be eligible for “resale”?”

      That’s actually a good point, like many of your other points.

      Maybe they’ll only make some books resalable like only some books are lend-able based on publisher restriction? In any case, I hope none of my books will be resalable. I’m new to the market and I’m writing for a small niche market, so I’d make even less money than I already am (and I’m making very little as it is). However, if the author was compensated for a resale, it might be better than the whole piracy out there, where we get nothing at all. However, I very much doubt piracy would stop just because people could buy the “used” ebooks cheap, because pirates seem to have a very distorted mindset when it comes to rights with all sorts of silly justifications.

      I’m not supporting this market place Amazon may or may not be planning. One of my publisher is already re-formatting all of their ebooks to include a legal clause to make reselling of the title unauthorized. If that doesn’t work, I’ll support them in removing the ebooks altogether from Amazon, even if it means I’ll make less money. It’s the principle. I’m very sure they won’t be the only publisher to take such action. If enough publishers take action, Amazon should be forced to reconsider (or maybe not, they seem to have a one way direction and won’t let anyone stop them).

      1. Erica, I support you in part, but only in part. If your publisher put a legal clause in the front of the book making reselling of a physical book at a used bookstore illegal, would you support that based on the “principle”? Because it is the same principle. You’re exercising dictatorial control over what someone can do with their own property, years, decades and centuries after they purchased it.

        You wrote: “I’m not supporting this market place Amazon may or may not be planning. One of my publisher is already re-formatting all of their ebooks to include a legal clause to make reselling of the title unauthorized. If that doesn’t work, I’ll support them in removing the ebooks altogether from Amazon, even if it means I’ll make less money. It’s the principle.

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