Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Wash.: Claim that Amazon engaged in illegal tying with its print-on-demand services fails, (Sep 2, 2014)

By Edward L. Puzzo, J.D.

A book author’s claims that Amazon engaged in an illegal tying arrangement regarding its print-on-demand services failed because it was untimely and did not show that Amazon conditioned the sale of one of its products to the purchase of another of its products, the federal district court in Seattle has ruled (Joseph v. Amazon.com, Inc., August 28, 2014, Coughenour, J.).

Author Rhawn Joseph brought a claim, alleging that Amazon engaged in an unlawful tying arrangement involving print-on-demand publishing. Print-on-demand (POD) publishing involves the printing of books only when an order is received from a customer, rather than pre-printing books in bulk and later selling them from an inventory of hard copies.

Amazon offered authors a number of different ways to sell books to consumers through its website. Joseph participated in Amazon’s Advantage and Marketplace and Associates programs to sell his books.

Under the Advantage program, customers would place orders and offer payment through Amazon, which would then purchase the book from the author or publisher at a wholesale price and re-sell it to the customer at a higher retail price. Under this program, authors were required to provide an inventory of hard copies of their books before the sale, or else utilize Amazon’s POD service, BookSurge. Authors were permitted to use another POD service only if they also provided Amazon with an inventory of hard copies, a requirement not imposed on those using Amazon’s POD service. Joseph alleged that this was an illegal tying arrangement.

Under the Marketplace program, the author would be responsible for having the book printed and shipped directly to the consumer, but Amazon would take a portion of the sales price as its charge for providing a platform for the interaction between buyer and seller. Under the Associates program, website owners could include links on their website to Amazon. The site operator would earn money from Amazon when customers clicked on the link and purchased a book at Amazon.

Class action. Joseph brought his claim, pro se, as a putative class action on behalf of all print-on-demand authors and publishers using Amazon to sell books at any time after February 10, 2008. As an initial matter, the court stated that the right to represent oneself pro se is personal to the litigant and does not extend to representing other parties, including other individuals in class action lawsuits. Thus, the court dismissed the case insofar as it purported to represent a class of litigants.

Timeliness of antitrust claim. Private antitrust actions are subject to a four-year statute of limitations from the date the action accrues, explained the court. Except in the case of continuing violations, such cases accrue when the defendant commits an act injurious to the plaintiff’s business. Joseph’s tying claim was premised solely upon Amazon’s allegedly unlawful policy of requiring publishers who want to use its service to either (a) use Amazon’s own POD service, BookSurge; (b) enroll in the Amazon Advantage Program and provide approximately five hard copies of each book title to be sold if the publisher wishes to have Amazon directly sell the books on their behalf; or (c) sell the books directly to consumers through Amazon‘s Marketplace program. Amazon made this policy publically effective on March 31, 2008, when it published an “Open Letter to Interested Parties” about its new POD policy, as acknowledged by Joseph. Consequently, Joseph had until March 31, 2012 to file his complaint alleging an unlawful tying arrangement. Joseph did not file his lawsuit until December 10, 2012, the court noted. Joseph also failed to demonstrate a continuing violation that would have made his filing timely. He admitted in his brief that he stopped selling hard copies of his books to Amazon around 2008, and never sold, shipped or provided a POD book to Amazon. Thus, the court ruled, Joseph’s claim was untimely and Amazon was entitled to judgment on the pleadings.

Tying claim fails. Even if Joseph’s complaint were timely filed, the claim would not support the finding of an unlawful tying arrangement. Tying, the court explained, involves conditioning the sale of one product on the purchase of a second product. In the Ninth Circuit, the court continued, it must be shown that (1) the defendant tied together the sale of two distinct products or services; (2) the defendant possessed enough economic power in the tying product market to coerce its customers into purchasing the tied product; and (3) the tying arrangement affected a “not insubstantial volume of commerce” in the tied product market.

Here, Joseph failed to allege that he was forced to use Amazon’s BookSurge POD service. Joseph admitted that he refused to use the BookSurge POD service and never used it to sell books on Amazon. This fact was fatal to his claim, the court stated. Beyond that, Joseph admitted that Amazon does not condition the use of its services in selling books upon the use of its BookSurge POD service. This fact was also fatal to his claim, stated the court. Joseph did not allege nor prove that Amazon required booksellers to use its BookSurge POD service in order to use its other bookselling services. Thus, ruled the court, Amazon was entitled to judgment on the pleadings regarding Joseph’s antitrust claim.

The case is Civil ActionNo. C13-1656-JCC.

Attorneys: Rhawn Joseph, pro se. James Alexander Reese (Farella Braun & Martel) for Amazon.com, Inc.

Companies: Amazon.com, Inc.

Cases: Antitrust WashingtonNews