Digital Media Ownership: What does it mean to “purchase” or “buy” digital media?

June 9, 2020 | by Wong Fleming

In a recently filed lawsuit, a court may have to decide whether online providers of entertainment content are violating consumer protection laws when they claim to allow consumers to “buy” entertainment content which in reality is more akin to a time-limited license to view the content.  It’s a case that could have ripple effects across the entire industry depending on what kind of injunctive relief the court grants.

On April 20, 2020 a class action lawsuit was filed in the United States District Court in the Eastern District of California against, Inc. (“Amazon”).1 The lawsuit alleges that Amazon currently has the right to completely remove digital content such as movies and tv shows from your library even if you “bought” the content. This means that when consumers click “buy” for movies, television shows, or other digital content on Amazon, they are not actually “buying” the content. According to Amazon’s Terms of Use, Amazon has the right to remove this content whenever it wants, without notice to the consumer. For example, a consumer may “buy” a movie for $15.00 with the belief that they can keep it forever, just as they would a physical copy of the content, but that is not actually the case under the current Terms of Use. The lawsuit raises claims surrounding the California Consumer Legal Remedies Act, False Advertising, and the California Unfair Competition Law.2 Perhaps more importantly, the lawsuit seems to fundamentally question what it means to “purchase” or “buy” digital media content.

Class Action Claims

The first claim brought in the lawsuit is that Amazon violated California’s Consumers Legal Remedies Act (“CLRA”). The theory behind this claim is that Plaintiff, as well as other Class Members, have engaged in transactions under the CLRA with Amazon when Amazon agreed to sell, and pursuant to those agreements, sold video content to Plaintiff and the Class Members.3 It is alleged that Amazon’s actions, representations, omissions, and conduct have violated the CLRA because they extend to transactions that are intended to result in the sale of goods and services to consumers.4 The main issues for the Court to analyze here, pursuant to California Civil Code § 1770(a), is to determine if Amazon made representations that video content had characteristics and benefits that it did not have.5 Specifically, it is whether Amazon has made representations that the video content “purchased” would be available for viewing indefinitely while Amazon knew this video content could become unavailable for viewing due to content provider licensing restrictions or other reasons.

The second alleged claim is that Amazon engaged in its advertising and marketing with the intent to directly induce consumers to purchase video content based on Amazon’s false and misleading representations and omissions.6 In making and disseminating the representations and omissions, Amazon knew or should have known that the representations and omissions were untrue or misleading.7 The lawsuit claims that Amazon subscribers paid way more for video content than it was actually worth due to Amazon’s representations and omissions.8 The third claim alleging a violation of California’s Unfair Competition Law (“UCL”) utilizes a similar theory. Essentially, it is that Amazon’s unlawful, unfair, and/or fraudulent practices included making false and misleading representations and/or omissions to its subscribers.9

All three of these claims are seeking private injunctive relief and possible public injunctive relief. Public injunctive relief is defined as “injunctive relief that has the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public.”10 One key difference between a private and public injunction is the primary beneficiary of the relief. Private injunctions “resolve a private dispute” between the parties and “rectify individual wrongs,” though they may benefit the general public incidentally.11 By contrast, public injunctions benefit “the public directly by the elimination of deceptive practices,” but do not otherwise benefit the plaintiff, who “has already been injured, allegedly, by such practices and [is] aware of them.”12

On its face, this class action is seeking to have Amazon change their policies as they pertain to “buying” digital media content. This could potentially mean changes in representations Amazon makes to its subscribers so that consumers are more clearly informed that they are only acquiring a license to view rather than actually purchasing something they can hold indefinitely. As of now it is not clear if the class action is looking to force Amazon to honor its offer to “buy” or enjoin Amazon from removing the digital media content a consumer has bought, but these ramifications could be elicited as the case progresses or if other similar lawsuits are filed in the future.

Implications Moving Forward

This class action was filed just a little over a month ago, so it will be quite some time before the Court issues a final decision. Depending on how the Court analyzes the various claims raised, it will be interesting to see how other digital media content providers interact with consumers in the future.

There are currently a few statutory laws which directly address the ownership of digital goods. The First Sale Doctrine provides that an individual who knowingly purchases a copy of a copyrighted work from the copyright holder receives the right to sell, display, or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner. The right to distribute ends, however, once the owner has sold that particular copy.13 The privileges created by the First Sale Doctrine do not “extend to any person who has acquired possession of the copy or phonorecord from the copyright owner, by rental, lease, loan, or otherwise, without acquiring ownership of it.”14 In the United States, the First Sale Doctrine has been applied predominately to physical goods. The EU has looked more closely at the right to resell downloaded software.15 This class action raises the question on whether the First Sale Doctrine will require some retooling to reflect the realities of the digital age. Now more than ever, it is important for the law to continue to develop and address the various issues created by advancements in technology.

This class action also shines light on the differences between actually purchasing digital content versus licensing the right to view that digital content. In order to know if you are in fact “purchasing” something that you will have access to indefinitely, it is vital that you read and understand a content distributor’s Terms of Use. For example, even though you might see a “Buy” button next to your favorite movie while browsing Amazon’s vast digital media library, you wouldn’t actually be “buying” anything in a traditional sense if you went through with that purchase. Instead, pursuant to the Amazon Prime Terms of Use, Amazon grants you a “non-exclusive, non-transferable, non-sublicensable, limited license, during the applicable Viewing Period, to access and view the Digital Content in accordance with the Usage Rules, for personal, non-commercial, private use.”16 Furthermore, “Purchased Digital Content […] may become unavailable due to potential content provider licensing restrictions or for other reasons, and Amazon will not be liable to you if Purchased Digital Content becomes unavailable for further download or streaming.”17 In other words, you are not “buying” the content, you are simply “licensing” the right to view the content on Amazon’s platform and your access can be revoked at any time.

If consumers are not diligent in reading such Terms of Use and other End-User Agreements, it is likely that they are not actually aware of what they are “buying”. Until digital media content distributors are required to be more transparent in their representations, consumers must continue to read the agreements they often blindly enter into. It will be interesting to see how this class action plays out and the effects it will have on the sale and consumption of digital media. Until then, do your homework when making digital purchases, and perhaps hold onto all those DVDs you considered getting rid of.



[2] Id.
[3] Id.
[4] Id.
[5] California Civil Code § 1770(a)(5)
[7] Id.
[8] Id.
[9] Id.
[10] Blair v. Rent-A-Center, Inc., 928 F.3d 819, 824 (9th Cir. 2019)
[11] Id.
[12] Id.
[13] See 17 U.S.C. § 109(a) & (c).
[14] See 17 U.S.C. § 109(d)
[17] Id.