Being an avid reader, I was excited when Amazon launched the Kindle and the Amazon bookstore in India. I started ‘buying’ a number of books from their bookstore, the most recent being the latest Dan Brown offering. The popularity of the book was obvious from the fact that a number of my friends asked me if they could borrow the book from me—now that I had a copy.
Image above is from Jorghex’s collection in Wikimedia Commons here and has been published under a Creative Commons Attribution-ShareAlike 3.0 Unreported License.
Then came the conundrum. Could I lend the e-book to my friends? I could lend my Kindle itself, but could my friends download the e-book on their Kindles, as long as I gave permission? I felt I should be allowed to do that as ‘buying’ in the traditional sense would mean that I had the right to lend, and re-sell, to others.
To get an answer to my question, I visited the ‘help’ section on the Amazon website. This is the current policy—only certain books that are bought can be lent. Also, books can be lent only by US customers, and that too only for 14 days. As far as I can tell, Indian customers don’t have the right to lend books currently (or at least all the books I have bought can’t be lent). This means that I do not have the option to sell my e-book to a second hand bookstore or even lend to a friend who wants a copy (well I could, but that could amount to illegal activity).
So, in essence, when we ‘buy’ these e-books, we are not really buying these items, we are just given a license to use the contents in a certain manner. This got me thinking. If we are only being given a license to use this e-book, then why does the website display the message “Buy Now” when advertising and not “License Now”? Or “Buy the License to Read the Contents of this Book Now?” Not as catchy, and perhaps misleading to the consumer.
The Consumer Protection Act, 1986 (“COPRA”) is the main legislation in India that seeks to protect the interests of consumers. Interestingly, under the COPRA it is an offence for any person to use unfair means to entice and dupe customers who are generally not very well informed about both the product that they are buying, as well as the rights they have vis-à-vis that product.
In fact, the COPRA specifically allows consumers to file a complaint against any person who indulges in an ‘Unfair Trade Practice’. The term has a very long definition, but a few things caught my eye. Under the COPRA, the following acts are ‘Unfair Trade Practices’:
the practice of making any statement, whether orally or in writing or by visible representation which,
(i) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model; ….. or
(vi) makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services.
Additionally, misleading advertisements have also been interpreted by Indian Courts as an unfair trade practice, for example:
Society of Catalysts v. Star Plus T.V., IV (2008) CPJ 1 (NC): Here, a TV channel and mobile operator conducted a contest in which answers had to be sent by SMS. The advertisements claimed that there was no charge for participating in the contest. However, the SMS rates for sending answers were higher than usual SMS rates. So, the cost of participation was in fact built into the high SMS rates. The TV channel collected a large amount of funds, but distributed prizes for only part of the funds collected. This was held to be an unfair trade practice.
Cox & Kings (I)Pvt. Ltd. v. Joseph A. Fernandes, (2006) CPJ 129 (NC): In this case a cruise was advertised for 2 nights 3 days, however, the consumer effectively got only 1 night and 2 days. The advertisement was clearly deceptive and another example of an unfair trade practice.
Courts have however rarely taken up similar misrepresentations in the digital arena, and there is no case law to suggest how courts would view applications of these provisions in the digital paradigm. When a consumer goes to an online shopping site, they will never see these sites display a message such as ‘license music’ or ‘music license just a click away’. Rather, they always use the term ‘buy’ music or ‘buy’ e-books. In fact, a customer will likely never read the word ‘license’ until they take the time to go through the fine print in a ‘web policy’ or the ‘terms and conditions’ page.
Although not yet tested in the courts, looking at the purpose of the Consumer Protection Act, and the way courts have interpreted and enforced its provisions, there is a possibility that the practice of using the word ‘buy’ in online advertisements for shopping websites could be construed as an unfair trade practice under the COPRA. Especially in newer markets like India, online websites must be careful while selling products to consumers to ensure that there are no deceptive or misleading advertisements that induce a customer to believe that they are actually buying the product in the sense they are used to, as opposed to just a license to view or listen to the material!
(Deepa Mookerjee is a member of the faculty at myLaw.net.)
10 replies on “Are we really “buying” Ebooks?”
I loved your arguments and of course your curious legal mind venturing into this conundrum. However if they agree to the terms and conditions of not ‘buying’ it in the traditional sense (even without reading it!) wouldn’t that, in your opinion waive this claim of deceptive advertisements?
Thanks for your comment. It raises an interesting point. There is certainly merit in your argument.
But, in my opinion, even if the consumers did agree to the terms and conditions, I think an argument could be made that these terms and conditions are not well displayed and are so verbose that often consumers find it difficult to understand. Given that this is so different from the traditional concept of a ‘sale’, the consumers could argue that this was misleading and if nothing else the key points of how this ‘sale, is different from a traditional sale must be well displayed on the website. Of course, this argument has never been tested in indian courts and it is possible that the court may agree with the argument that once you accept the terms and conditions, it would be presumed that you had read it.
The consequent rebuttal for this could be that ‘sale’ as defined in this context is indeed different from the normal sale however in the given industry, ‘sale’ is the norm and we are complying with it and hence there is no misleading. Caveat Emptor.
Let me know what you think of this.
Thats a very good argument that can be used by the industry. At the end of the day, it will need to be tested against the time honoured principles of displaying the main terms and conditions of a contract clearly (even if it is the standard for the industry).
Correct me if I am wrong, but unless they use the font size smaller than the usual practice in an agreement would it violate displaying the terms clearly?
I am confused on this point.
It’s definitely a good point, but I’m not convinced it holds water. If we’re going by the definition of ‘sale’, even if we ignore the definition under Indian law, ‘sale’ is generally accepted around the world as transfer of ownership for a price paid. This is especially important on the internet as various jurisdictions around the world, led by the US, have made clear distinctions between ownership and usage licenses to the point of being unreasonably strict on the matter, in my opinion. This is the reason why Prof. Lawrence Lessig started the copyleft movement and also why we ensure on this blog and on myLaw.net that every image we use is either owned by us or is in the public domain, and we make sure we attribute every image to its author and mention the license under which we are using the image. In this context, I consider it pretty unfair that a company like amazon can use the word “buy” so flippantly without giving reasonable ownership rights to the buyer over product that is being “sold”.
I agree, they should’ve used a new term, like ‘Pay, download and use’ instead of ‘buy’, however look how conventional meanings are not practicable in the online world. I’ll give you an illustration, you can lend your book to ONE friend at ONE time. Here, you can lend the song you ‘bought’ to ANY NUMBER of people and therefore it isn’t pragmatic to apply conventional methodology onto cyber space. The buyer will lose and lose substantially if he allows such thing to go on.
Or simply, they should create something like ‘Lendle’.
This is similar to the copyright debate surrounding EULA (End User License Agreement) that comes with purchasing shrink wrap software. The question of purchasing a copyright and a copyrighted article. The taxation angle to this question is presently pending before the Supreme Court.
Wasn’t this clarified in the GE case which the government subsequently overruled by retrospective amendment and maintained its position that payments for software are made as royalty payments, which as per the government are all software sales, and therefore subject to income tax and withholding tax?
Apologies for the late reply.
I believe the restricted question in GE was with respect to the interpretation of S. 195 of the ITA. The SC went on to hold that the obligation to deduct TDS did not arise at the time of remittance of moneys to a non-resident.
The SC declined to go into the question of whether payments made by software suppliers to non-resident would amount to ‘royalty’ under S. 9. Instead, a question of law was framed and the matter was remitted to the High Court for de novo consideration.
Eventually, the High Court decided the matter in favor of the Revenue, in CIT v. Samsung Electronics Ltd. reported in (2011) 203 TAXMAN 477 (Kar.).
The Co-ordinate Benches of the Karnataka High Court gave similar orders based on the reasoning in the above judgment and a batch of SLP’s have been filed before the SC on this point.