What can people do to be legally protected while licensing digital products over the internet?

Question

As I've developed develop digital products and teach at an educational organization, I've become increasingly interested in studying the details of the law that effect the modern generations of new business. One of the defining characteristics of modern business is selling digital products online, but obviously there are problems with legal protection on that front as it is newer legal territory. Now, don't get me wrong, I'm not looking to hire a lawyer or get some kind of formal legal advice, but rather to find the right direction and a proper precedent for people facing this situation. Specifically, what is the best license agreement that allows any random person off the street to be legally protected when licensing purely digital content over the internet?

What I mean is, say a business owner or sole proprietor wants to license a digital file, like a picture or audio file so that the buyer can use it to make and sell their own games, videos, commercials and freelance work, educational purposes, presentations, or really anything else that uses multimedia. But, the creator of the original digital product obviously doesn't want a buyer to simply start selling or distributing the individual files themselves or as a collection of files, they original creator or organization wants to retain their rights while preventing the buyers from selling specifically the files or modified versions of the files while allowing the buyers the utility to make commercial end-products with it. What kind of terms of use, in a simple text document, can be provided to ensure this with a product download? And does such a text document actually create any binding agreement in the first place?

I would hope someone who has studied this or has experience with this matter could point me in the right direction so that I can convey it to designers and students alike. You can use microsoft word, but you can't sell microsoft word or any of its components or reverse engineer it. What kind of agreement is the equivalent of that but for digital media files?

Answer 1

The problem is stating exactly what you want to license versus forbid. You indicate that you want to prohibit resale of unchanged copies of the work, so you could include a license condition that forbids the sale of the unmodified work, but allows the sale of a derivative work. That would mean that the person can't just re-sell copies of the original image file, but that can package it with other works and sell a derivative work, or change the formal from GIF to JPG, or add a border around the file, and sell the derivative work. But that doesn't seem to be strong enough.

It's not clear what distinction you are drawing between forbidding the sale of "the files or modified versions of the files", but allowing "the utility to make commercial end-products with it". In order to "use" the material, you are copying it and transforming it in some way. You might be able to craft language in a specific license to use a high-resolution digital representation of a unicorn, which allows a certain free use of copies with a certain level of degradation, such as 5% of the original resolution and limited to 8 bit color. There is no general license that covers all such cases, because we don't know what cases are in versus out. The rights-holder needs to figure out what they want protected, and then hire a competent attorney to draft the license.

Answer 2

Go to shutterstock.com and study their license terms. Their whole business is selling licensing to images for all different purposes. With a huge range of prices, and a huge range of conditions depending on your needs.

And while you cannot assume that their license terms are all without loopholes that could be exploited, if that happened and cost them or their provides of artwork real money, then the terms would be changed.

Consider that an end user's cost is the cost of finding the right image, the cost of having the contract checked by a lawyer, the cost for the license, and the cost of proving conformance with the license, and that this is all business. So the provider will try to create a license that you can use without consulting a lawyer, and that doesn't cost you money for proving conformance, because that is all increasing the cost of the product without any benefit for the seller, and therefore makes the seller less competitive.

Anyway, in most cases there will be no copyright transfer, so you can do what the license allows you to do, and nothing else. Of course you can always offer to buy the copyright, and then you can do whatever you want.