Login | December 26, 2024
New California digital property licensing law announced
RICHARD WEINER
Technology for Lawyers
Published: November 8, 2024
Do you (or your friends, family or clientele) know what you’re buying when you buy a digital asset like a book, movie or song?
Probably not.
If you think that you’re buying an ownership interest in that digital property, look again at the fine print.
Much of the time, you’re actually purchasing a revocable license to that property.
This creates a phenomenon known as “disappearing media.”
While maybe some lawyer somewhere reads the license agreement for that Kindle book and knows that Jeff Bezos can take his toy home at any time, most consumers aren’t aware of that fact.
In fact, most people probably think that they are buying a property interest when they are just buying a revocable license.
The US Department of Commerce’s Internet Policy Task Force noticed this back in 2016 and published an opinion that stated that consumers do not have a clear idea of this distinction when they hit a “buy” button.
But there hasn’t been any movement to control this at the federal level.
Enter, as always, California, whose native companies house an untold number of these digital assets, a state which would be the world’s fifth-largest economy if it were a country.
And also the leading state in trying to control through laws the runaway freakshow that is modern technology.
The new California statute, AB 2426, amends the state’s false advertising laws.
These laws give a civil right to claim damages for unfair competition, as well as a potential misdemeanor penalty.
The new law covers advertisers and sellers of digital media. It prohibits companies from the unqualified use of terms like “buy” or “purchase” when the companies are actually selling revocable licenses to the digital goods.
It also requires a specific acknowledgment from the consumer that the purchase is of a license and not a permanent property interest.
The law has a wide definition of “digital goods” that includes digital applications, digital games, digital audio works (e.g., prerecorded or live songs, music and other sound recordings), digital audiovisual works (e.g., motion pictures, musicals, videos) and digital books (e-books).
While Cali is the first state to enact a law like this, it won’t be the last, and the feds may eventually get around to it.
But for now, the California law goes into effect on Jan. 1, 2025.
Thanks for the analysis to Morgan, Lewis & Brockius LLP.