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4820-6426-3239v.5 0051461-001497

ARBITRATION DEMAND – 1

Davis Wright Tremaine

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Suite 2200 1201 Third Avenue Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax

AMERICAN ARBITRATION ASSOCIATION AMAZON DIGITAL SERVICES LLC,a Delaware limited liability corporation, Claimant, v. NILMER RUBIO, an individual, Respondent. No. DEMAND FOR ARBITRATION

INTRODUCTION AND BACKGROUND

1.

Respondent Nilmer Rubio has engaged in a scheme to manipulate and abuse Amazon’s services to reap illicit financial gain, while harming Amazon and those who use its services. Amazon brings this action both to protect its users from Respondent’s unlawful scheme and to obtain redress for the harm inflicted by it. 2.

Amazon Digital Services LLC, a subsidiary of Amazon.com, Inc. (collectively, “Amazon”) gives independent authors and publishers the ability to publish works directly through Amazon’s Kindle Direct Publishing (“KDP”) program. 3.

KDP allows authors and independent publishers to reach millions of active eBook readers on Amazon. Authors control the rights to their works and can make changes to their books at any time. Authors can set up an eBook for publication in minutes, and within 72 hours the eBook appears for sale on the Amazon Kindle Store. 4.

KDP users earn royalties when Amazon customers purchase their books or read them through Kindle subscription reading programs. Kindle Unlimited (“KU”) permits

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subscribers, for a monthly fee, to read as many books as they want from a selection of over one million titles. The Kindle Owners’ Lending Library (“KOLL”) is a benefit for Amazon Prime members, and it allows members to borrow one eBook per month at no additional cost. KDP authors can choose to include their books in KU and KOLL by enrolling in an optional program called KDP Select, which offers certain benefits to authors in exchange for making their eBooks exclusively available through Amazon for a 90-day period. 5.

KDP authors participating in KDP Select earn monthly royalties based on the number of pages of their eBooks that KU and KOLL customers read that month. Amazon maintains a global royalty fund, from which KDP Select authors receive a share, calculated as a percentage of the total number of pages read through KU and KOLL that month. 6.

The more pages KU and KOLL customers read of an individual author’s books, the larger the author’s share of the royalty fund becomes; and, accordingly, other authors will receive less from the fund. The KDP royalty system thus depends on the integrity of a fair allocation of page reads—

i.e.

, that authors are not artificially inflating their page reads to the detriment of other authors. 7.

Amazon thus employs various tools, including automated and manual reviews, to protect against abuse of the KDP royalty system. Amazon also requires KDP authors to ensure that no tactics used to promote their books manipulate Amazon eBook programs. If authors cannot trust that the KDP royalty system fairly rewards page reads of their eBooks, that loss of trust damages the integrity of the KDP program and the reputation of Amazon as a reliable and reputable self-publishing service. 8.

KDP Select authors’ books are also available for sale to Amazon customers to purchase at an individual price. These book sales counts towards a book’s “best seller’s rank” on Amazon. The higher the book’s best seller’s rank, the more visible it becomes to customers, which in turn may result in increased purchases and greater author royalties from KU/KOLL reading activity.

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9.

Another benefit that KDP Select offers to authors is the ability to select up to five “promo days” out of each 90-day KDP Select enrollment period in which their eBook will be available to customers to download for free. Books that are downloaded for free during the promo days also count towards their Amazon best seller’s rank, and the promo days can have the effect of allowing books to rise in best seller’s ranking. 10.

Amazon prohibits KDP authors from publishing books that are undifferentiated or barely differentiated from existing titles in the Kindle store for purposes of preserving a positive customer experience. 11.

Respondent Nilmer Rubio has tried to manipulate and abuse the KDP service for financial gain and to the detriment of other KDP authors and Amazon’s reputation. Rubio has proposed to authors that he can artificially inflate their page reads in return for a share of their additional profits—as a kick-back. As one author wrote Amazon, Mr. Rubio’s actions “call into question the integrity of [Amazon’s] platform.” 12.

Amazon files this demand for arbitration against Mr. Rubio to protect Amazon and its publishers against Mr. Rubio’s abuse of the KDP service, bringing claims for breach of contract, intentional interference with contractual relations, and violation of the Washington Consumer Protection Act.

PARTIES

13.

Claimant Amazon Digital Services LLC is a Delaware limited liability corporation with its principal place of business in Seattle, Washington. 14.

Respondent Nilmer Rubio is an individual residing in Olangapo City, in the Philippines.

JURISDICTION AND GOVERNING LAW

15.

Mr. Rubio agreed to the Amazon Conditions of Use when he created his Amazon customer account on October 11, 2015. Mr. Rubio agreed that “[a]ny dispute or claim relating in any way to your use of any Amazon Service, or to any products or services sold or distributed by Amazon or through Amazon.com will be resolved by binding arbitration ….” The