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I copied following answer from this question.

Since WordPress is GPL code, all code publicly distributed must also be licensed either as GPL, or GPL compatible.

The GPL states you cannot charge for code, but you can charge for distribution. So when you buy gravity forms, you're not paying for the plugin, you're playing for the downloading and acquisition of the plugin.

Once you have the plugin it is perfectly legal to burn it to a CD and mail it to 20,000 people free of charge. You won't get the support or updates ( unless you pay them again, or you have a support contract ), and it'd be a pretty nasty thing to do ( they have a business! ), but it's perfectly legal.

If above is true, why many plugin authors sell plugin via "1 site Licence", "2 Site Licence", "Unlimited site Licence".

According to above answer even though I buy "1 site Licence", I should able to use it on unlimited sites as well as my clients sites legally? Is it correct?

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According to this fairly authorative link - its a bit of a grey area - the themes themselves must be redistributable under the GPL, however the CSS and GRAPHICS don't need to be.

In practice this means if you strip out all the CSS and graphics and put in your own then you can redistribute as much as you like, however as a large percentage of the look and feel is typically encoded into the CSS this is unlikely to be a viable solution.

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