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Areas of Interest
October 3rd, 2024
New California Law Restricts Use of Words “Purchase” & “Buy” for Licensed Digital Goods
On September 24, Gov. Gavin Newsom signed into law AB 2426 (effective Jan. 1, 2025), a consumer protection bill that expands the scope of false advertising in California. In short, AB 2426 prohibits interactive entertainment and digital media companies from using words like “buy,” “purchase,” or any other words that indicate unrestricted ownership over digital goods. Violators may face injunctions and civil penalties imposed by California regulators or civil claims from individuals with proper standing.
To comply with this law, digital goods sellers must provide adequate notice or obtain an affirmative acknowledgement that digital goods are “bought” or “purchased” under the terms of a license (e.g., an End User License Agreement) prior to the point of sale. These notices or acknowledgements have specific requirements under the law, such as being clear and conspicuous and separate and distinct from any other terms presented to purchaser during the transaction.
Specifically, AB 2426 does not apply to digital goods sellers who:
1. (At time of sale) Receive an affirmative acknowledgement from purchasers indicating: (i) purchaser is receiving a license to the digital goods, (ii) a complete list of restrictions/conditions of the license, and (iii) access to the digital goods may be revoked by seller if seller no longer has a right to the digital goods; OR
2. (Prior to sale) Provide a clear and conspicuous statement: (i) in plain language that buying/purchasing is a license, and (ii) including a hyperlink/QR code to access full terms and conditions of the license.
Notably, the law also does not apply to digital goods that are subscription-based services, free digital goods, or any digital goods that are made available through permanent offline download to external storage sources that can be used without connection to the internet.
If you have questions about the new law, or about other interactive entertainment issues, please contact S. Gregory Boyd at (212) 826 5581 or gboyd@fkks.com, Sean F. Kane at (212) 705-4845 or skane@fkks.com, or any other member of The Frankfurt Kurnit Interactive Entertainment Group.
Other Entertainment Law Alerts
Major Studios and Guilds Forge New COVID-19 Production Safety Agreement
As production begins to restart in an ever changing COVID-19 landscape, The Alliance of Motion Picture and Television Producers (AMPTP) and other major studios announced an important deal with the DGA, IATSE, Teamsters, Basic Crafts, and SAG-AFTRA -- meant to ensure the safety and security of their members during the upcoming months. Read more.
September 22 2020
New York City Reopens for Film and Television Production
On July 17, 2020 NYC Mayor Bill de Blasio announced that, with the City entering Phase Four of Reopening on Monday July 20th, 2020, film and television production in the City can restart again in earnest. Read more.
July 21 2020
Los Angeles County Authorizes Television, Film, and Music Production Resume on June 12, 2020 With Strict Regulations
On June 11, Los Angeles County approved a staged resumption of film and TV production beginning June 12, 2020. However, it comes with extensive regulations. Read more.
June 16 2020
