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Is Amazon Handmade Overreaching on Artisan Terms of Use?

Dana Truesdale and Robin Zebley have sold their artwork on Etsy for years, so when they learned about Amazon’s new Handmade marketplace, both viewed it as another potentially attractive sales channel.

“When I heard about Amazon’s Handmade, I decided to apply to “diversify my eggs,”” Truesdale says. “I felt Amazon would be a great opportunity to further enhance my business plan.”

However, after encountering the Handmade at Amazon terms of use (TOU) agreement, the artists took different routes: Zebley, a portrait painter, accepted it and set up shop on the site. Truesdale, a sculptor, hit the brakes.

Truesdale found the TOU document confusing and, in her view, possibly too far-reaching regarding the rights it might grant Amazon over her work.

She balked at lines such as this one in the agreement: “If you submit material, and unless we indicate otherwise, you grant Amazon a nonexclusive, royalty-free, perpetual, irrevocable, and fully sublicensable right to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, and display such content throughout the world in any media.”

Zebley also found the TOU unclear, but she felt more comfortable interpreting it thanks to her background as a legal assistant, without which she admits she “wouldn’t even know what some of the terminology is.”

She concluded that per the TOU, Amazon can’t violate her copyrights and thus can’t steal her artwork. “At least, that’s what I’m pretty sure it says.”

Meanwhile, Truesdale weighed another concern: Amazon, unlike Etsy, doesn’t exclusively run a marketplace for unique, hand-crafted objects from third-party sellers. Rather, Amazon is in multiple other businesses, and happens to be a global giant of online retail.

“The main reason that I never had cause for concern over Etsy’s TOU is because Etsy isn’t selling anything. Only Etsy’s vendors are selling on the site. Could Etsy’s independent sellers copy an idea? They sure could, but it would be nothing like your design being manufactured by big business,” Truesdale says.

So Truesdale, who started her business The Midnight Orange on Etsy in 2008 and currently only sells on that marketplace, determined that the risks outnumbered the rewards, especially since she’s “at capacity for the most part” with the business her Etsy shop generates.

“My brand is my baby. I created it, nurtured it, grew it, and I don’t want to give any of it away by signing something with concerning language (that is) un-interpretable to me,” Truesdale says.

Meanwhile, Zebley, who has her own website at robinzebley.com in addition to her shops on Etsy and on Amazon Handmade, is so far happy she took the plunge into the Amazon marketplace: the sales volume is very good, and she finds the store easy to manage.

Zebley, who has been an Etsy seller for 6 years, says it’s a pity that the language in Amazon’s TOU has scared away sellers that would be a good fit for Handmade.

“The marketplaces could and should “dumb it down” for us,” Zebley says in reference to TOUs.

Indeed, Truesdale isn’t the only seller who has opted to stay on the sidelines of the Amazon marketplace, judging by recent concerns expressed online by fellow artisans in this Etsy discussion thread and in comments posted by readers on this publication.

And while the discussion seems centered on Amazon, some sellers are wondering whether they should also be worried about Etsy’s TOU, which contains similar language:

“By posting Your Content, you grant Etsy a non-exclusive, worldwide, royalty-free, irrevocable, sub-licensable, perpetual license to use, display, edit, modify, reproduce, distribute, store, and prepare derivative works of Your Content to provide the Services and to promote Etsy, your Etsy shop, or the Services in general, in any formats and through any channels, including across any Etsy Services or third-party website or advertising medium.”

Are the concerns warranted? Yes, says one expert attorney.

“Of course, it’s very reasonable to be concerned that these websites are overreaching in trying to acquire rights to the works that are being posted, absolutely,” says Joe Nabor, partner and chair of the Trademark and Copyright practice group at Fitch, Even, Tabin & Flannery, a Chicago-based law firm specializing on intellectual property. “Yes, sellers should very well be concerned about it.”

Companies that operate online marketplaces – and websites in general – need to draft detailed TOUs to protect themselves legally against claims such as copyright infringement.

That’s why these two TOUs grant Amazon and Etsy, for example, permission to copy, post and edit photos and text submitted by the sellers. This is not only reasonable but necessary for the companies to properly operate the marketplaces.

But the lengths to which Etsy and Amazon go in these TOUs is excessive, and could be interpreted to, for example, let them use a seller’s attractive T-shirt design and manufacture T-shirts with that design and sell them, he says.

Now, that doesn’t mean Etsy and Amazon would want to go down such a route and risk gaining a bad reputation as big, bad corporations that take advantage of their marketplace sellers. One could argue that such a scenario would trigger a public relations nightmare for them and a mass exodus of their sellers, leading to the likely failure of their respective marketplaces for handmade items.

But as we all know, what seems unreasonable for a company to do today may not be so five years down the road. Companies often change their strategies and their business models. Sometimes they get bought and new management comes in with radically different values and ideas.

“You have to look at the full legal ramifications of accepting these agreements,” says Nabor, who hasn’t represented Amazon, Etsy nor any of their competitors.

A key issue for small sellers to be aware of is that if they relinquish control of the rights to their work via an overreaching TOU, they’re at the mercy of the other party’s goodwill and common sense.

A solution, of course, would be for the marketplace operators to rein in the scope of overly broad TOUs.

“These TOUs are usually written by very talented lawyers, and they have the talent to narrowly tailor these agreements in a way that’s fair to everyone. There’s no good reason not to do that,” Nabor says.

They may feel motivated to do this if new competitors appear and try to exploit this issue by offering sellers TOUs that are more attractive, friendlier and narrower, Nabor says. In other words: the free market may come to the rescue.

In fact, this may be a strategy Etsy is already using and benefitting from, judging by Truesdale’s example. She recognizes that the Etsy TOU is similar to Amazon’s but she’s way more comfortable with it because, in her opinion, it’s written in a friendlier, clearer way, causing her to trust Etsy enough to use their platform for her business.

“There’s the legalese, but they also offer straight talk right in their terms, explaining what each item means and how our content will be used in a way that can easily be interpreted and understood,” Truesdale says.

She’s referring to language such as this in the document:

“We don’t claim any ownership to Your Content, but we have your permission to use it to help Etsy function and grow. That way, we won’t infringe any rights you have in Your Content and we can help promote your stuff.”

She also likes that they include examples of how they intend to use the content in ways that are mutually beneficial to Etsy and to sellers.

For example, Etsy says that its TOU gives it permission to, for example, display photos sellers have uploaded of their products and resize them so they can be viewed properly via mobile devices.

Etsy also explains that the TOU allows it to translate text provided by sellers into other languages, as well as feature sellers’ product photos in high-visibility places, such as Etsy blogs, Etsy’s home page or roadside billboards.

This effort by Etsy to help sellers understand the scope of the agreement makes it TOU friendlier than Amazon’s, says Jeff C. Dodd, a partner at Andrews Kurth LLP in Houston and the head of the law firm’s global intellectual property and technology practice.

“What you want to look for in a TOU is what’s the scope of the use and what’s the intended purpose,” says Dodd, who doesn’t have Amazon nor Etsy as clients.

If the marketplace operator restricts the purpose and narrows it, saying it will use sellers’ content specifically in connection with the website, that’s much less problematic than a TOU that’s broader and open-ended in the rights it awards the company, he says.

So what about sellers who have agreed to a TOU and later feel the company went on to interpret it and act on it in a way that was unreasonable, harmful and unfair to them?

Nabor says that sellers may argue in court that they entered into what’s called a “contract of adhesion,” which means that they had little or no bargaining power to modify it in any way, and that in such a “take it or leave it” scenario, they had to accept it because the marketplace in question was too important for their products and their business.

Then from there, the seller could argue that the contract is thus unenforceable. But to have this option, it’s important that sellers at least try to negotiate with the marketplace operator in a way that leaves a paper trail, such as by sending them an email.

“Courts in the past have asked sellers: “Did you try to object?,”” Nabor says. “If the answer to that is “No, I just assumed I couldn’t change them,” then you’re going to lose on that score.”

Granted, it’s extremely unlikely that any of these companies will agree to modify a TOU in order to accommodate the concerns of individual sellers, but “until you at least try, you’re going to have a hard time arguing that it was impossible,” he says.

It’s very likely is that such an email will receive a reply from the company’s legal department.

“It gives you a little bit more of a legal advantage, should you ever have to take issue with the TOU,” Nabor says.

Asked by EcommerceBytes whether its TOU gives Etsy the right to reproduce and sell as its own the items created or designed by the sellers, a company spokeswoman said: “Absolutely not.”

“Our sellers maintain their ownership rights over their own items and intellectual property. We will never steal our sellers’ content or make or sell copies of our sellers’ items,” she said via email.

“We very much want Etsy to be a safe and welcoming place for artists,” she added.

Ultimately, Etsy’s success is directly linked to the success of the sellers on its marketplace. “This is the foundation of our business,” she said.

Amazon didn’t reply to requests for comment. The company previously had provided EcommerceBytes the following statement regarding this issue:

“We respect the intellectual property rights of the Artisans who will sell on Handmade at Amazon. The goal of Handmade at Amazon is to provide customers with an opportunity to buy unique products directly from the Artisans who make them. The rights the Artisans grant us allow us to promote their products across multiple channels and help them grow their businesses on Amazon.”

Juan Carlos Perez on Linkedin
Juan Carlos Perez
Juan Carlos Perez
Juan Carlos Perez is an award-winning freelance writer and editor with 20 years of experience in technology journalism. The ecommerce market is one of his expertise areas. You can follow Juan on Twitter @PerezTechJourno, contact him via LinkedIn and see a sample of his work at Clippings.me.