If you've ever purchased copyrighted items such as certain fabrics, fonts and digital graphics, you may have encountered the phrase "For Personal Use Only." On its face, it is an attempt to keep people from selling certain copyrighted works or otherwise using them commercially. So, is this enforceable? Well, like most legal questions - it depends. This statement takes us into contract law and there are a couple of concepts you'll want to understand first in order to make a determination about when or how such a statement might be binding and what that means for you.
How is a Contract Formed?
In order for the Personal Use Only language to be enforceable, it has to be a part of a valid contract or license. Let's discuss contracts first. If you think a contract is a piece of paper with a lot of words where you sign at the end, you may want to go ahead and re-think those assumptions because contracts can take many forms. They can be verbal, just a few words, scribbled on a napkin or even implied. But, no matter the form, a contract generally has four main elements:
1) Offer - Making a promise to do or refrain from doing something;
2) Consideration - Each party to a contract must receive a benefit from the deal. This is called “consideration” and it must be something of value that is exchanged. Consideration can take the form of money, another promise, effort or anything of value;
3) Acceptance - the person given the offer must say “yes” to it in some way. Acceptance can be shown through words, conduct or performance;
4) Assent or Mutuality - this means that all parties have agreed upon the terms and intend to enter into a contract. Assent can be demonstrated through “written or spoken words or by other acts or by failure to act.” [1]
If any of these elements are missing or ineffectual, the contract likely is not enforceable.
Copyright License vs. Contract
When dealing with copyright, a license is the method by which permission is given to do something that would not be legally permissible otherwise (such as allowing someone to reproduce and sell your work). A license is a type of contract but can have some differences from "normal" contracts.
For instance, under a so-called "normal" contract, each party must receive a benefit from the deal for it to be enforceable. Otherwise, the deal is a gift and does not form a valid contract. This is identified above as “consideration” and without it, a contract is almost always going to be unenforceable. With a license, on the other hand, permission to use a work in a certain way can be given freely without consideration being exchanged and that license can still be valid and enforceable. [2] So, as you can see, depending on the specifics, a copyright related agreement can be a license, a full-blown contract, neither or both. Why is this important to know? Because copyright and contract are two different areas of law which require different showings and have different remedies. So, depending on the specifics, the "Personal Use Only" language may be valid under the Copyright Act, under state contract law, either or both and you'll want to know which set of laws is applicable to your situation.
Copyright Rights Can be Split Up
The creator of a copyrighted work is the owner of several exclusive rights as it pertains to that work including the right to reproduce it and the right to distribute the work to the public. Those rights are inherently separate and can be licensed and contracted out independent of one another. For example, if I write a children's book, I can sell the manufacturing rights (the right to reproduce the book) to one company, the distribution rights (the right to sell the book) to another company and the derivative rights (the right to create other works from the book - like a screenplay) to a third company. That is my prerogative. Unless the law carves out an exception, I can generally limit the ways in which my book is exploited by others; that is the essence of copyright. Why is this important to know? Because stating that an item is being licensed "For Personal Use Only" is a concise way to say that the right to distribute the item to the public (i.e. sell it) is not included in the license and this sort of splitting of rights is generally acceptable in the appropriate context. Let's take a look at a couple of examples to flesh this out.
Example 1 - Enforceable License and Contract
I have a Silhouette Cameo digital cutting machine and I often buy cutting files for it from the design store over there. The image shown here is an example of a creative design that you can purchase on their website. You are given the opportunity to check the "personal" or "commercial" license box before you checkout and again when you go to your cart. Before paying you are shown the Terms of Use and you have to type in your password to confirm receipt of the parameters of the license. The Terms state that "By downloading these images you are entitled to keep them for personal use as long as you wish. You are NOT entitled to redistribute these images electronically, or in print, or in any other medium without written consent or a commercial license from Silhouette America, Inc."
The terms as described would likely be deemed both an enforceable license under copyright law and a valid contract. The terms of the sale were clearly identified, money would be exchanged for access to the file and you have to demonstrate acceptance of and assent to the terms. So, if I purchased this graphic with a personal use license and then proceeded to use it on items for sale, the owner of rights would have both copyright infringement and breach of contract causes of action against me.
Example 2 - Enforceable License Only
Back in the day when I used to make jewelry, I frequented a business called Fire Mountain Gems. I bought tons of beautiful beads there and they also offer a bazillion different tutorials and beading projects. Take the piece shown in the photo. It is a super intricate, creative bib-style necklace. Fire Mountain offers detailed step-by-step instructions on how to make this necklace but they also make it clear that the design ideas and tutorials are provided for non-commercial educational uses. ("Non-commercial" use is essentially the same as saying "personal use only.") So, you can reproduce the piece but you cannot sell your reproduction.
A fair number of people would probably balk at this non-commercial stipulation because they may feel as if the artist has somehow relinquished the right to control what is done with the piece by explaining how to make the item. But, that is not how copyright works. The artist is permitting the reader to reproduce her copyrighted piece; something they would not otherwise be authorized to do. Being given a license to reproduce a piece does not mean that you also have a license to distribute the piece; it is not a package deal. The authorization goes only as far as the license states for copyrighted works.
Now while this situation probably forms an enforceable copyright license, it likely would not be an enforceable contract. Reason being, nothing of value is being given to the artist in exchange for the right to reproduce the jewelry piece. As such, this agreement lacks consideration and would not give rise to a breach of contract claim.
Example 3: Enforceable Contract Only (Maybe)
Let's say I went to a fabric website and purchased a nice cotton blend printed with the Disney "Cars" movie pattern shown here. I make a tote bag out of it and list it for sale in my Etsy shop. Can Disney come after me? Well, sure they can. But, there is a good argument that this would not be copyright infringement because I did not reproduce or change the copyrighted pattern in any way, I just sewed it into a shape. There is a case that specifically states that these sort of actions do not infringe on the copyright in the fabric.
But, if it is likely not copyright infringement, what about breach of contract? In my example above, let's assume that there was a "Personal Use Only" statement on the fabric selvedge but I never saw it. In that case, it would be difficult to enforce any contract when there was nothing to bring the restrictions to my attention. I cannot agree to a contract when I never knew of the terms. Sure, the statement was printed on the selvedge and, while a failure to read is almost never a defense to contract formation, it can be a defense if “the writing does not appear to be a contract and the terms are not called to the attention of the recipient.” [3] A short statement placed on the edge of a piece of fabric - an edge that is likely to be thrown away - is probably not the sort of term that can be enforced if it is not brought to the purchaser’s attention in some fashion.
But, what about a situation where I knew the fabric had a "Personal Use Only" statement? Well in that case, it is a much better breach of contract case against me. Although I never signed anything or clicked a box stating my agreement to be bound by the terms, there is case law that says if you know about a contractual term and understand it, you cannot just ignore it, claim it is unenforceable and continue to benefit from the use of the item. It is a fairly standard contract law principle that if you accept the benefit of a transaction knowing it comes with restrictions, you are bound by the restrictions even if you never explicitly say “I agree to these restrictions.” [4]
The Takeaway for Crafters
When dealing with copyrighted goods, always be alert to and aware of the terms of use. I regularly purchase things like graphics, fonts, vectors, video clips, photos, design assets, etc. and I never hit "submit" on a purchase without looking for the terms. If you cannot find them, don't assume it can be used freely because copyrighted items seldom can. Also, never assume a term that you see is unenforceable and go forward with a purchase as that determination may turn out not to be the legally correct conclusion if it is ever probed.
[1] Restatement (Second) of Contracts § 19 (A. Law Inst. 1981).
[2] Bitmanagement Software GMBH v. U.S., No. 20-1139 (Fed. Cir. Feb. 25, 2021).
[3] Specht v. Netscape Communications Corp., 306 F.3d 17, 30 (2nd Cir. 2002).
[4] Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004).