I don't know whether it is illegal. I am trying to figure out if this violates their TOS:
Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times, solely on the Device or as authorized by Amazon"
Is that "or" a get-out clause? Because the first part seems to quite definitively rule out what they did.
The most logical reading of the or is that you are allowed to display the content as many times as you want, and those displays may either be on the screen or in another manner that has been authorized by Amazon.
That said, I'm sure their lawyers will be able to spin it as meaning that they grant you the right to keep the copy as authorized by them.
When you "purchase a book" from the kindle store, all you are actually purchasing is a license to view the book that is bound by amazon's terms of use.
Criminally illegal, no. But that leaves open civil suits, which are sure to come.
1) You can sue anyone for anything. The US does not have a "loser pays" rule, though frivolous lawsuits can include attorney's fees.
2) Class action lawsuits are very profitable for lawyers when they win. They need to convince a jury of 12 people who couldn't get out of jury duty that "Big Corporation" was wrong. They get a percentage of the total judgment.
My guess is that some lawyer will pick this one up. They'll sue Amazon based on "common sense" and Amazon will realize that a jury isn't going separate a "book" from an "e-book". The plaintiff's lawyers will equate it to removing a book from your bookshelf in your house.
Amazon will argue commas in their TOS or Amazon will settle. On top of it all, Amazon demonstrates why I purchased a netbook instead of a Kindle for my e-book reading pleasure ... and why I don't buy e-books that I can't remove the DRM from.
[edit] since I can't edit the original due to replies.
I still think they stand a good chance of a class action lawsuit. The likelihood of it succeeding is less since it sounds like the issue relates to "who really owned the copyright" and they had to take down the content due to that ambiguity or fraud.
I concur - bonehead handling by Amazon perhaps, Exhibit A to why the copyright laws might need reforming, but not likely to lead to legal liabilities for Amazon given that they refunded everybody's payments.
Amazon needs to make its licensing policies clear up front and not bury them in fine print.
I may not like it when I only get a license that might be yanked, but I'll be a lot less upset about it the day it is yanked if I did the deal with open eyes at the start.
Though Amazon may be technically correct, it deserves the drubbing it is getting by failing to make its DRM policies clear up front to its customers.
It obviously obscured this issue to ensure that the issue would not harm Kindle sales. Now that this bomb has exploded, Kindle sales will be hurt anyway.
Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times, solely on the Device or as authorized by Amazon"
Is that "or" a get-out clause? Because the first part seems to quite definitively rule out what they did.