The short version
- Section 17500.6 regulates the word, not the entitlement. It does not convert a licence into ownership and does not stop a platform withdrawing access — it stops the platform calling that licence a purchase.
- A seller has two compliant routes: an affirmative acknowledgment taken at the time of each transaction, or a clear and conspicuous statement before each transaction linking to the full licence terms. Either one must be distinct and separate from the rest of the terms.
- Three exceptions apply: subscription services, free digital goods, and goods the seller cannot revoke — which includes making the file available at the time of purchase for permanent offline download to external storage, usable with no internet connection.
- Enforcement runs through the False Advertising Law: injunctions and restitution under § 17535, civil penalties up to $2,500 per violation under § 17536, and misdemeanour liability under § 17534. The buyer gets no statutory damages.
A digital storefront sells access on terms it controls. That has always been true, and the licence agreement behind the button has always said so. The new rule does not touch the terms. It touches the button — and only in California, and only for a defined list of goods.
What section 17500.6 actually forbids
The prohibition is narrow and precisely drawn. It is unlawful for a seller of a digital good to advertise or offer it for sale "with the terms 'buy,' 'purchase,' or any other term which a reasonable person would understand to confer an unrestricted ownership interest in the digital good, or alongside an option for a time-limited rental" — unless one of two things happens first.
Read that trailing clause carefully, because it is the part sellers skim. A Buy button placed next to a Rent button trips the section by itself. The contrast is what does the misleading: if one option is expressly time-limited, the other reads as permanent, whatever word is printed on it.
- Route one — affirmative acknowledgment. Taken from the purchaser at the time of each transaction, indicating that they are receiving a licence, giving a complete list of the restrictions and conditions of that licence, and stating that access may be unilaterally revoked by the seller if it no longer holds a right to the good.
- Route two — a clear and conspicuous statement. Given before each transaction is executed, stating in plain language that "buying" or "purchasing" the good is a licence, and including a hyperlink, QR code or similar method to reach the full licence terms.
"Clear and conspicuous" is defined rather than left to argument: larger type than the surrounding text, or contrasting type, font or colour, or set off by symbols or other marks. And subdivision (b)(2) adds the requirement most compliance drafts miss — the acknowledgment or statement must be "distinct and separate from any other terms and conditions of the transaction that the purchaser acknowledges or agrees to". A line inside the terms of service the customer accepted when they opened the account fails on both counts: it is not separate, and it is not per transaction.
It is a labelling statute, not a grant of ownership
This is the correction almost every reader needs, and it is worth being blunt about. Section 17500.6 gives nobody a permanent copy of anything. A storefront can run a fully compliant checkout and still switch off your library next year. What it can no longer do is take your money under a word that implied it would not.
What the disclosure buys you, and what it does not
What § 17500.6 gives the buyer
- A statement, before payment, that this is a licence
- A route to the full licence terms at the moment of sale
- A named risk: access may be revoked if the seller loses its rights
- A false-advertising hook where the page said none of it
What it does not give the buyer
- Ownership of a copy
- Any right to resell, lend or hand it on
- Protection against the licence being withdrawn
- A refund when the file goes dark
The statute regulates the word, not the entitlement. Disclosure is the whole of the remedy.
The revocation the statute makes sellers disclose is usually not misconduct. A platform distributes a film or an album under a licence of its own, with a term. When that term ends and is not renewed, the platform stops holding the right it passed down to its customers — which is exactly the condition the acknowledgment has to name, "if they no longer hold a right to the digital good". The chain ends at the top and the effect arrives at the bottom.
Why the copy was never yours to keep
The instinct that a purchase should survive the seller comes from a real rule. Under 17 U.S.C. § 109(a), the owner of a particular lawfully made copy may "sell or otherwise dispose of the possession of that copy" without the copyright owner's permission — the first sale doctrine, and the reason a second-hand bookshop is lawful.
Subsection (d) is the half that decides digital sales. The privilege does not extend to anyone who "acquired possession of the copy or phonorecord from the copyright owner, by rental, lease, loan, or otherwise, without acquiring ownership of it". Licensees are outside it. In Vernor v. Autodesk (9th Cir. 2010) the court set the test: a user is a licensee rather than an owner where the copyright holder specifies that a licence is granted, significantly restricts the ability to transfer the software, and imposes notable use restrictions. Every mainstream digital storefront satisfies all three, deliberately. The general shape of that bargain is unpacked in what a software licence agreement actually grants.
The three exceptions, and the download condition
Subdivision (b)(4) lifts the section entirely for three categories: a subscription service that offers access "solely for the duration of the subscription"; a digital good offered "for no monetary consideration"; and a digital good the seller cannot revoke access to after the transaction. The third is the one worth getting right, because it is the compliance path most sellers would prefer and the one most often claimed without qualifying.
When the no-revocation exception actually applies
Does the seller keep a kill switch?
Is the file handed over at checkout?
No — access is served by the seller
Yes — permanent offline copy to the buyer's own storage
No means of withdrawing it
Outside, on the wording
Nothing can be revoked, so the exception is met — but a seller streaming from its own servers will struggle to establish it.
The clean exception
Available at the time of purchase, permanent, offline, on the buyer's storage. No disclosure required.
Access checks back with the seller
Disclosure required
The ordinary streaming library. Take the acknowledgment, or run the conspicuous statement before checkout.
Still disclosure required
A download that phones home to authorise is revocable. Offering a file does not by itself buy the exception.
Four conditions travel together in that clause and each one carries weight: available at the time of purchase, not on request later; permanent, not for a window; to external storage, not to a folder inside the seller's app; and usable without a connection to the internet. Subdivision (b)(3) then removes the obvious objection: the section "does not require a person to download a digital good, or prohibit a person from storing a digital good on a server". Cloud delivery stays lawful, with the disclosure attached.
If you sell a course, an ebook, a plugin or a game
"Digital good" is a defined list, not a general phrase: a digital audiovisual work, digital audio work, digital book, digital code, or digital application or game. The application-and-game limb expressly reaches "any add-ons or additional content", so a paid plugin or expansion is inside it. A recorded video course reads onto the audiovisual limb; an ebook onto the book limb; a licence key onto the digital code limb. Live coaching sold as a service is not a digital good at all, and neither is a cable, satellite or broadcast service, which the definition carves out by name.
The practical question for a small seller is which of the two routes to build. The conspicuous statement is cheaper: one styled line above the checkout button, with a link to the licence terms, rendered on every transaction. The acknowledgment is heavier because it must carry a complete list of the restrictions and conditions — which in practice means your licence grant has to be short enough to summarise. That is an argument for writing the grant properly in your terms of service and your software licence agreement rather than inheriting a long one you cannot condense.
One related promise is worth separating out. "Lifetime access" is not a section 17500.6 problem — it is a contractual one, and it binds you for as long as a court thinks a lifetime lasts. The disclosure does not soften it, and the two clauses have to agree with each other; the drafting is covered in what online course terms of sale have to cover.
Set the licence and the access period together
Most disputes over digital sales come from a checkout that promised permanence and terms that granted a revocable licence. Draft the two in one pass so the button and the clause say the same thing.
A seller-side pass over your checkout
- Does any Buy or Purchase wording appear without a licence disclosure beside it, or beside a rental option?
- Is the disclosure its own element, not a line inside the terms the customer already accepted?
- Does it appear on every transaction, rather than once at signup?
- Is it styled to the definition — larger, contrasting, or set off — rather than grey small print?
- If you rely on the download exception: is the file offered at purchase, permanent, offline and to the buyer's own storage?
Who enforces it, and what it costs
Section 17500.6 has no remedy of its own. It was added to the False Advertising Law, and it inherits that chapter's machinery. Under § 17535 a violator may be enjoined, and the court may make orders necessary "to restore to any person in interest any money or property" obtained by the practice. Actions may be brought by the Attorney General, a district attorney, county counsel, a city attorney or city prosecutor — or by a private person who has "suffered injury in fact and has lost money or property" as a result. Under § 17536 a violation carries a civil penalty of up to $2,500, assessed per violation, but only in an action brought by those public prosecutors. Under § 17534 a violation of the chapter is a misdemeanour; the bill's own digest confirms the point, noting that it expands the scope of a crime.
Two consequences follow for sellers outside California. Section 17500 reaches statements disseminated "before the public in this state", so location of the business is not the test — advertising into California is. And because the penalty is assessed per violation and a violation is a transaction, the exposure scales with volume rather than with the size of any one sale.
When your library goes dark
None of the above is much comfort at the moment a title you paid for stops opening. What is actually available runs in rough order of cost.
What a buyer can do, cheapest rung first
- Free
Capture the listing
Screenshot the button wording, the price, the date and any disclosure — or its absence. This is the evidence for every rung above it.
- Free
Ask the seller in writing
Request the licence terms in force at the sale, and a refund or replacement. Many revocations are settled here with a credit.
- Free, but time-limited
Card chargeback
Assessed against what the page said at the time. The window runs on the card network's clock from the transaction, so check it early.
- Free
Complain to the AG or district attorney
The $2,500 penalty under § 17536 can only be pursued by a public prosecutor. A complaint is the only way to reach it.
- A filing fee upward
Private action under § 17535
Needs injury in fact and lost money or property. The relief is an injunction and restitution, not damages.
Most disputes end on rung two. The statute's real force is on rung one: it makes the page itself an admissible record.
What the statute is really doing
Section 17500.6 treats a mislabelled button as false advertising rather than as a defect in the licence, and that choice is the whole design. The legislature did not try to make digital copies permanent, which would have meant rewriting the licence chains behind every catalogue. It made the storefront describe the thing it is selling.
For a buyer that is smaller than it sounds and more useful than it seems: the risk is now on the page at the moment of the decision, in type you can read. For a seller it is a drafting job rather than a business-model problem — the grant, the disclosure and the checkout have to say the same thing, and the checkout is the one customers read. Whether the click that carries it binds anyone at all is a separate question, and the answer depends on how the agreement was presented.
Sources
- California Business and Professions Code § 17500.6 — digital goods
- AB 2426 (2024), Stats. 2024, ch. 513 — bill text and digest
- Business and Professions Code § 17500 — false advertising
- Business and Professions Code § 17534 — misdemeanour liability
- Business and Professions Code § 17535 — injunctions and restitution
- Business and Professions Code § 17536 — civil penalties
- 17 U.S.C. § 109 — limitations on exclusive rights: transfer of a copy
- Vernor v. Autodesk, Inc. (9th Cir. 2010) — opinion
General information, not legal advice. This guide explains how these documents and rules generally work. Law varies by jurisdiction and changes, and none of it is applied to your circumstances here. For anything consequential, consult a licensed attorney where you are.
Frequently asked
Why do digital stores now say "licence" instead of "buy"?
Because California Business and Professions Code § 17500.6 took effect on 1 January 2025. A seller may not advertise a digital good with terms implying unrestricted ownership, or alongside a rental option, unless it takes an affirmative acknowledgment at each transaction or shows a clear and conspicuous statement before checkout that buying the good is a licence, with a link to the full terms.
Can a company take away a film or album I bought?
Usually yes, if the terms say so. A storefront distributes under a licence of its own, and when that licence ends it no longer holds the right it passed on. The California statute does not prevent that. It requires the seller to disclose the possibility before payment, which is why the acknowledgment has to state that access may be revoked if the seller no longer holds the right.
Does the first sale doctrine let me resell an ebook or a game?
Not where you hold a licence rather than a copy you own. Section 109(a) of the Copyright Act protects the owner of a lawfully made copy, but section 109(d) withholds that privilege from anyone who took possession without acquiring ownership. The Ninth Circuit treats a user as a licensee where the agreement says so, restricts transfer and imposes notable use restrictions — which describes most digital storefronts.
Which sales are exempt from the disclosure requirement?
Three categories. Subscription services offering access only for the duration of the subscription. Digital goods offered for no monetary consideration. And goods the seller cannot revoke access to after the transaction, which the statute says includes making the good available at the time of purchase for permanent offline download to external storage, usable without an internet connection.
What happens to a seller that ignores the rule?
The section sits inside the False Advertising Law and inherits its remedies. Public prosecutors can seek an injunction and restitution under section 17535 and a civil penalty of up to $2,500 per violation under section 17536, and a violation of the chapter is a misdemeanour under section 17534. A private buyer may sue for an injunction only after showing injury in fact and lost money or property.