On his blog Morris Rosenthal reports on a class-action lawsuit filed today against Amazon by POD publisher BookLocker.com:
Today a class action lawsuit was filed in response to Amazon’s threat to remove the "Buy" buttons of publishers who refuse to sign up with their on-demand printing subsidiary, Booksurge. If certified, the class action will most likely include all publishers who use on demand printing to print their books for distribution. If it functions like the class action lawsuits involving credit card or telephone billing that we all find ourselves party to on a regular basis, publishers will automatically be included unless they opt out. The primary plaintiff in the suit is BookLocker.com, Inc., the company that first broke the silence about the heavy-handed tactics Booksurge was using against Lightning Source’s larger publisher customers.
The full complaint is available as a PDF, but I’ve taken the liberty of posting it here via SlideShare as well (click here if you don’t see the embedded doc below):
Essentially, the complaint alleges Amazon is in violation of the Sherman Act by engaging in "tying":
An arrangement whereby the seller of some product or service requires, as a condition to the sale of that product (the tying product), that the buyer purchase some additional product (the tied product). The tying arrangement is unlawful when the seller has some power over the market for the tying product. Tying arrangements are generally per se illegal, assuming that the selling firm has the market power to force the arrangement upon its customers.
The meat of the complaint is in paragraphs 38 and 39:
Amazon forces POD publishers to use BookSurge for printing services when they might otherwise prefer to purchase such printing services elsewhere.
Amazon’s practice of tying printing services to sales in the Online Book Market unreasonably restrains trade and is unlawful per se under Section 1 of the Sherman Act.
In light of recent moves by Amazon (including reports of bullying in the UK), litigation was an inevitability. And this isn’t the only pending lawsuit Amazon’s involved in (it’s not even the only anti-trust lawsuit Amazon is involved in — Gerlinger v. Amazon.com is still under appeal). Amazon lists seven items in the "Legal Proceedings" section of its 2007 annual report, among them patent infringement and breach of contract, fairly standard for a public company of their size (and they’re on the plaintiff side of the aisle against New York State on sales taxes). It will be interesting to see whether other POD publishers join the fray.