Practical Ecommerce

Selling on Multiple Channels? Know Terms of Use

Any company that sells products online or markets online typically uses multiple channels — such as its own website, Facebook, LinkedIn, Etsy, and Amazon. However, most companies don’t understand the rights they are giving up when they market through channels beyond their own websites. Oftentimes, companies give up rights to certain data that is placed on these other sites.

If you are going to sell products, or post content, or otherwise market on these outside channels, you have to play by their rules. In this article, I will address the most common rights granted to the owners of these websites through the terms of use and what they mean.

If you are going to sell products, or post content, or otherwise market on these outside channels, you have to play by their rules.

Importance of Intellectual Property Ownership

When you start to use a website, it most cases you agree to its terms of use — either explicitly or implicitly by using the website. This is a binding contract between you and the owner of the website. It will go over who can use the website, what you can do with the website, and other matters such as returns, payment, and other general uses.

For people that contribute information or content to these websites, such as pictures and product descriptions to Facebook or posts to LinkedIn, one of the most important, and most overlooked, areas of a terms of use is the intellectual property section. This matters because it is through the intellectual property section that a user of a website gives up rights to what is posted.

Often, the most important aspect of the intellectual property section of the terms of use is the grant of the website owners a “license” to whatever you post to the website. Simply put, a license is a right to do or use something with the content that you put on the website. Having a license is not the same as ownership; usually the license holder’s rights are limited in some way. However, some licenses are so broad, that the rights they grant can start to approach those of ownership.

Intellectual Property Terms

Here are the most commonly used terms, as well as a general explanation of what these terms mean for you and what rights that you are giving up if you agree to grant a license.

  • sub-licensable. This means that the owner of the website that you are using can license the rights to your work posted on the website without asking your permission (provided that the owner can only license the rights that you have granted to the owner, nothing more) without asking your permission and the owner continues to own the rights that you gave them.
  • royalty free. This means that the owner of the website does not need to pay you anything to use your work for any reason unless otherwise stated in the terms of use for the website even if the website owner makes money off of your work.
  • perpetual. This means that you cannot revoke the license at any time and that the website owner gets the rights granted in the license forever.
  • irrevocable. This means that you cannot revoke the license for any reason unless allowed in the contract even if the website owner makes money off of your work, uses it in a way that you don’t like, or just wants to terminate the agreement.
  • non-exclusive versus exclusive. If the license is exclusive, the website owner has the sole rights to the work that you posted on it (including any rights that you had to the work — for instance, you can only post it to that website and not to another website such as Facebook). If the license if non-exclusive, then you maintain rights to the work and you can assign such rights to other people and entities also (i.e., you can post the same thing on Facebook and LinkedIn).
  • transferable. If the license is transferrable without requesting permission of the owner, then the website owner can transfer that license granted in the agreement to anyone that the website owner wants. For example, if you grant ECLewis.com (this is my firm’s website; it is only an example, my terms of use state something different) a transferable, non-exclusive, sub-licensable license to copy, modify, or create derivative works of any content you post online to ECLewis.com, this means that you are granting me the right to transfer the same license to someone else. Make sure you are okay with this, because the license may be granted to your competitor, a website that you find morally questionable, or just someone you don’t like, all without your future permission.
  • assignable. If the license is assignable, it is very close to being transferable. The only thing that may (depending on the court) be different between the two terms is whether the liabilities under the contract are also being transferred.
  • fully paid up. If a license is fully paid up, then the website owner does not owe you anything for future uses of the work that are allowed under the license. This means that, as long as the work is being used as agreed to in the license, you get no additional payment for all uses that fall under the agreed upon use.
  • worldwide. If a license is worldwide, this means the license that you grant is good throughout the world; the website owner can use the content both in the United States and in other countries as well.

Next month, I will follow up on how to review copyright and intellectual property clauses, by covering what “now-known” or “later discovered” mean and what “modify,” “adapt,” and “perform” mean from a legal standard in the intellectual property clauses in a website’s terms of use.

Elizabeth Lewis

Elizabeth Lewis

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