Did you know that someone who lawfully purchases your digital product could *technically* and legally resell, give away, or dispose of the product?!
Sounds crazy… I know, but here’s how this works. ⬇️
In the legal world, there’s something called the first sale doctrine that says an individual who knowingly purchases a copy of a copyrighted work from the copyright holder receives the right to sell, display, or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner.
Still sound crazy? Well to be quite honest with you, it’s because IT IS!
As a digital creator, the last thing you want is people ripping off your products for their own.
You put a lot of time and effort into creating your products and as a business owner, you want to know that time and effort is going to pay off – aka grow your business by attracting new followers, subscribers, and even earn you money (rightfully so).
In business, you have 3658375937 billion things to worry about (not an exact number, just an educated guess 😅) and someone reselling your products shouldn’t be one of them.
SO, how can you avoid this? As your legal bestie, I’m here to tell you how.
Short answer: digital product licenses help clarify how customers can and cannot use your digital products. When paired with properly implemented Terms of Purchase and clickwrap acceptance, licensing terms can help reduce the risk of unauthorized sharing, resale, and misuse of your products.
TL;DR: Digital Product Licenses
- Digital product licenses define how buyers can use your products.
- Different products may require different license types.
- Most digital creators should include licensing language in their Terms of Purchase.
- Clickwrap acceptance at checkout helps document customer agreement.
- Licensing terms can help reduce the risk of unauthorized sharing or resale.
How To Protect Your Digital Products From Being Resold
The most simple answer is this: implement contracts and/or licensing agreements in your business.
Yes, it really is THAT simple!
But if I know anything about being a business owner myself, it’s that simple doesn’t always equal easy.
Sometimes the most simple tasks are the hardest for us to do, so let me break this down a bit further and give you a seriously EASY way to implement this in your business.
First things first, it’s important to understand the different types of digital product licenses.
When you're creating digital products, understanding the types of licenses you can offer is crucial. It's the difference between protecting your work and maximizing its potential in the market.
The Key Licenses to Consider
| License Type | Best For | Allows Commercial Use? | Allows Resale? |
|---|---|---|---|
| Exclusive | Custom work or unique IP transfers | Depends on terms | Depends on terms |
| Non-Exclusive | Templates, courses, downloads | Depends on terms | Usually no |
| Rights-Managed | Photography, media licensing | Usually yes | Usually no |
| Royalty-Free | Stock assets | Often yes | Usually no |
| Personal Use | Consumer downloads | No | No |
| Commercial Use | Business resources | Yes | Depends on terms |
| GPL/Creative Commons | Open-source or public-sharing projects | Depends on license | Depends on license |
Exclusive License
An exclusive license means you are giving one buyer and only that buyer the right to use your digital product. Once sold, you cannot license the product to anyone else.
An exclusive license gives one specific licensee exclusive rights to use the licensed work in the manner outlined in the agreement. Because the rights are exclusive, the creator generally cannot grant the same rights to other buyers during the license term.
Exclusive licenses are often used for custom-created works, intellectual property transfers, or high-value licensing arrangements.
Non-Exclusive License
A non-exclusive license allows multiple customers to purchase and use the same digital product while ownership of the intellectual property remains with the creator.
The license can still include restrictions on sharing, resale, modification, or redistribution.
For instance, if you create a software tool, you might offer a non-exclusive license to multiple companies or individuals.
For most digital product shops selling templates, guides, courses, or downloads to multiple customers, a non-exclusive license with clear usage restrictions is often more common than a true exclusive license.
Rights-Managed License
A rights-managed license is specific and controlled. You define how, where, and for how long the buyer can use your product. This could include restrictions on geographical use, the duration of use, and the type of use.
Let’s use a photographer as an example – that’s an example of a digital work where the photographer may choose to implement a rights-managed license to control how a particular image is used.
Royalty-Free License
A royalty-free license lets the buyer pay once and use the product multiple times without paying additional fees, however, there are usually restrictions, such as not being able to sell the product as if it were their own.
This is a super common license for music, stock imagery, or other forms of media where the customer would typically need to use the digital product over and over again.
Personal Use License
A personal use license is exactly what it sounds like: the buyer can use the product for their own personal use, but they cannot profit from it or use it for any business purposes.
For example, a graphic designer might create digital templates that people can purchase for personal use, such as invitations or social media graphics, but they cannot resell them for business gain.
Commercial Use License
A commercial use license, on the other hand, allows the buyer to use the digital product for commercial purposes, which can include marketing, business operations, depending on the specific terms of the license agreement
General Public License (GPL) and Creative Commons
GPL and Creative Commons are licensing frameworks that allow creators to grant certain permissions to the public under predefined terms.
Depending on the specific license selected, users may be allowed to share, modify, distribute, or build upon the work, provided they follow the applicable license requirements. These licenses are commonly used for software, educational materials, and creative works.
Understanding each of these license purposes is the first step in protecting your digital products because they allow you to know which license YOU specifically need.
Something important to remember is that every digital product will be different.
Each time you create a new digital product, you must consider: how do I want people to be able to use this product? What is the intent?
Thinking about those things each time you create a digital product will allow you to then implement the correct licensing agreement into your terms of purchase, which is where the actual clause will be stated that buyers must agree to.
How Do You Choose the Right Digital Product License?
Ask yourself:
- Will multiple customers purchase this product?
- Do I want customers to use it personally, commercially, or both?
- Should customers be allowed to modify it?
- Can customers share it with others?
- Do I want to restrict redistribution or resale?
Your answers will help determine which licensing structure makes the most sense for your digital product.
How to Implement a Terms of Purchase for Digital Goods
Once you know what type of licensing you need for your digital product, it’s time to actually put it into action, so you can help reduce the risk of customers improperly sharing, distributing, or reselling your work.
So, how do you do it? Insert a Terms of Purchase at checkout.
The important thing for your Terms of Purchase is that you display your licensing agreement (our Terms of Purchase for Digital Products template already has that and allows you to edit based on your needs) and make sure that your terms are set up as a clickwrap (learn more about clickwrap agreements and why they matter) at checkout, so that the customer is actively agreeing to them when they make the purchase.
It really is that simple AND that easy.
Frequently Asked Questions About Digital Product Licenses
Can someone legally resell my digital product?
It depends. Copyright law, licensing terms, and the specific facts surrounding the transaction may all affect what rights a purchaser receives. Clear licensing language can help define permitted uses.
Do I need a license agreement for every digital product?
Most digital creators benefit from including licensing language within their Terms of Purchase so customers understand how the product may be used.
What is the difference between personal use and commercial use?
A personal use license generally limits use to personal purposes, while a commercial use license allows use in connection with a business or revenue-generating activities, subject to the license terms.
Is a Terms of Purchase enough to protect my digital products?
A Terms of Purchase can be an important part of your legal foundation, especially when paired with clear licensing language and proper acceptance at checkout, but no document can guarantee complete protection against misuse.
If you sell templates, guides, courses, downloads, or other digital products, your Terms of Purchase is often one of the most important legal documents in your business because it gives you a place to clearly communicate licensing rights and restrictions.
All you've gotta do is grab our Terms of Purchase for Digital Products template, plug in the details that apply to your business, and set everything up on your website.
Oh and to make it even easier for you, you’ll receive step by step instructions for how to implement the template correctly and put your business on stronger legal footing.