Internet retailer Amazon has been granted a patent to underpin an online marketplace allowing consumers to resell digital goods, but the technology could have copyright implications for the company.
Amazon first applied for the patent in 2009, and it was granted by the US Patent and Trademark Office (USPTO) on 29 January.
The model is described in Amazon’s application as a ‘secondary market’ for digital objects’ that allows consumers to store digital content they have purchased in a ‘personalised data store’ and sell, rent, gift, loan or trade this content by transferring it to other users’ stores.
According to the application, content will be deleted from the original seller’s data store after transfer, and there will be a limit to the number of times content can be traded. “When a digital object exceeds a threshold number of moves or downloads, the ability to move may be deemed impermissible and suspended or terminated,” it explains.
Amazon has allowed its users to lend ebooks since 2012, but the digital marketplace will be its first venture into music, books and app lending. While its concept has been approved by the USPTO, it’s unclear what record labels and film companies will make of the retailer's latest business model.
There has been little legal precedent set on lending digital content, and it's unclear whether the first sale doctrine of US copyright law - owners of physical content such as printed books, CDs and DVDs can re-sell their content - should or can be applied to digital works.
A similar online marketplace for pre-owned digital music, ReDigi, was launched in 2011 but is being sued by record labels EMI and Capitol (owned by Universal Music Group), who claim that it is a violation of the Copyright Act as the files uploaded and shared are unauthorised copies of original files and not original material objects.
A judgement is expected in the ReDigi case later this year and could set a legal precedent for similar digital marketplaces such as Amazon’s.
Hillel Parness, partner at Robins, Kaplan, Miller & Ciresi LLP in New York, said: “Recent and on-going cases demonstrate that the underlying legality or illegality of the resale of digital goods is often highly fact-specific. Some of the legal questions have included the application of the copyright first sale doctrine to digital goods, as well as contract issues regarding whether particular digital “sales” are sales at all.”
He added: “If Amazon plans to expand or enhance its digital marketplace along the lines of this patent, one can expect [it] is hard at work securing the agreement of its content partners…but if Amazon is unable to secure such agreements and nevertheless wishes to proceed, it could very well lead to litigation.”
This article was first published on 06 February 2013 in World IP Review
Amazon, digital marketplace, ReDigi, first sale, copyright