How to Legally Protect Your Digital Product Sales - Liz Stapleton

00:01 All right, guys, thank you so much for joining me for this session at the Courses and Membership Creators Summit i'm super excited to be here thank you, Kat, for having me we're going to be talking about legally protecting your digital product sales, especially if you are, you know, selling digital products and memberships there's new rules around subscriptions. So we want to make sure that you are going to be able to keep the money that you're making. So if we haven't met before, my name is Liz Stapeson i'm attorney, I'm a Blogger i've been speaking on the topic of legally protecting your online business for years at both in person and online virtual summits, including Fincon, the Robo Blast Summit, Niche Investor Summit i'm the host of the Blogger Breakthrough Summit i've spoken on it there.  

00:41 So very excited to be here with you guys and a big thank you to Kat before we start, I do just want to encourage you to turn off your phone, close your other tabs, and just get rid of any distractions i tend to talk really fast and I'm going to cover a lot of information, so I want to make sure you don't miss anything. So just take a moment, be focused i promise it's going to be worth your time. So before we start, I do need to give a quick disclaimer that while I'm attorney, I'm not your attorney.  

01:06 Chances are I'm not licensed where you live. Nothing presented here is meant to be considered legal advice it's for informational and educational purposes only. So with that disclaimer out of the way, let's go ahead and put your mind at ease this is what I'm going to be covering today. And guys, this is just like the tip of the iceberg when it comes to like legally protecting your online business but I feel like this is the most important things when you're selling courses in membership so we're going to talk about terms and conditions, what they are and why you need them, the basics of copyright and trademark and we're going to dip a little into AI and the copyright issues surrounding that as well, because I know it's more and more prominent these days.  

01:40 And then we're going to talk about the new FTC rule on our current subscriptions so let's go ahead and get started. Take a deep breath. I am a firm believer that while the legal stuff is super important, it doesn't have to be scary or hard so let's start with terms and conditions. Basically, they're your way of saying my house, my rules, OK it also lays out various payment and refund policies if you don't have these squared away, then you really have no recourse if someone requests their money back or you know, places a chargeback.  

02:09 You can win chargeback guys. You just have to show, hey, they agreed to these terms and conditions these are what the terms and conditions were. They access the course, whatever it's every chargeback I've ever fought, I've won. There have been one or two that I didn't fight just because I had stuff going on and I wasn't worth my time but it is really simple to win those if you get them. So it's your way to lay down the law of your business. You need to have really clear refund policies and especially for like memberships, for example, maybe you have a seven day refund policy on the 1st charge, right? But they can't get a refund seven days after the second charge, you know what I mean? So just kind of making that super duper clear.  

02:51 It's a great way to limit your liability you're not perfect, neither is your site tech hiccups happen. You don't want to get sued or lose income just because that's the case so you can put in a limit liability disclaimer in there as well. You're going to, if something does happen and people want to come after you, you get to decide where you're going to throw down you're going to say, hey, if you're going to come after me, you need to sue me where I live, I'm not going across the country to deal with this.  


03:17 So you can set what's called the jurisdiction of any potential legal issues. All righty. So that's kind of the basics of what terms and conditions are, right like I said, it's your way of saying my house, my rules if you don't like it, don't buy my stuff. It is super important that when people purchase that they have to agree to the terms and conditions and it should not be pre checked. You want them to have to physically go check the box that says I agree to the terms and conditions and that if they don't they aren't able to purchase and this is really easy to do i do this in the drive cart.  

03:48 You do have to go in and be like add my own terms and conditions, but if you don't have that, then it makes it a lot harder to enforce your rules. So anytime you are selling something, make sure that they are having to agree to your own terms and conditions, not just whatever terms and conditions are provided by if you're using Teachable or whatever platform you're using, which usually has their own terms and conditions as well. So make sure your terms and conditions are required to be reviewed and then document that fact so that if there are issues, you can show it.  

04:18 So moving on, we're going to go ahead and talk about just the basics of copyright and trademark. And I will kind of preface this by saying this is a very specialized area of law. This is not an area of law I've specialized, in but I can certainly go over the basics for you. If you want to pursue copyright trademark, you should definitely go find a copyright trademark attorney in your jurisdiction preferably. So it is a very specialized area don't just ask your buddy who has to be like a real estate lawyer to do it because it's very specialized so first up, trademarks this The purpose of a trademark is to protect the brand's reputation and inform the cost customer.  

04:53 Like, you know what you're getting when you buy Nike, right it's going to be quality the shoe will probably run a little narrow, but it's going to last. If you bought a pair of Nike shoes and they fell apart, like you'd be really confused. But it's not just tied to a name for example, there's Dove Chocolate and Dove soap they're the same name, but they're very different products and both are trademarked. So trademark applies to a category as well and so this is where it's very specialized you want to make sure you're trade marking in the correct category.  

05:21 So it's not just a name, it's a category that matters, which is why you should always hire an attorney. You know, there's Lexus, the car dealership, and LexisNexis, the legal research they're completely different they're actually spelled different, but they sound the exact same. They're both trademarked because they are. People aren't going to confuse them, right so if you're protecting the brands reputation, it's going to be a matter of is someone going to be confused if there was a Dove chocolate and then like Dove chocolate candy, you know, like that would be confusing they couldn't both be trademarked.  

05:51 Ok. Copyright, on the other hand, is making sure that what you're, what you've created or what others have created, you own that sort of intellectual property of what you've created it protects it from being stolen. Now, the great thing about copyright and trademark is that you don't actually have to register to claim. You do need to be the first when it comes to trademark copyright if you've created it, you own it, but you can't use the R symbol, the like R with a circle, that means it's registered you can use TM, you can use copyright, but you can't use R.  

06:24 And there are benefits to registering things like statutory damages, which can, you know, mean you get a certain amount of, you know, money if someone violates it. If you're not sure if you can use something like if it's this on the flip side and you want to be able to like feature something in a roundup, they need to ask permission. Ok, get it in writing that you're allowed to do that some bloggers, especially in like the food and craft space, will include sometimes in their terms and conditions, something like, hey, if you want to include me in a roundup, you're allowed to use one photo with attribution and a link to my site because they don't want to deal with a bunch of like email requests they just don't have time.  

07:02 So check terms and conditions and if nothing is clear, then ask don't just take. Attribution is not the same as permission. Ok, that is stealing. So you want to make sure your stuff doesn't get stolen and you want to make sure you're not stealing from others. Now where AI comes in, this is where it starts getting a little complicated. So there's this case where it's basically saying human authorship is the bedrock requirement for copyright.  

07:28 So this is a case where this guy like built an AI tool and had to generate, generate an image and he wanted to copyright that image. And the court said no, because it wasn't created by him, it's created by the technology, even though he built the technology. So it's whether the work is basically one of human authorship with the computer or other device merely being an assisting instrument, or whether the traditional elements of authorship in the work so literary, artistic, musical expression, elements of selection arrangements that are were actually conceived and executed by man and not by machine.  

08:01 So I think AI is great i use it in my workflows, right but I use it as an assistant i use it as like getting over a blank page syndrome i'm not taking what AI gives me and then just publishing it. And because of that, my stuff is still copyright protected, OK? If I did just take whatever AI spit out and published it, then it would not be copyright protected anyone could steal it and there's nothing I could do.  

08:24 That makes sense. Ok, so that's kind of the example we're going over here, right if you take the condom produced by AO and post AIAOAI and post it as it is, it's not going to be protected by copyright the implication is anyone can copy it, right there's nothing you could do, but if you're using it as an assistant, which I think most people in who are using AI smartly in their work are, then it can be a great tool to help speed up the process just don't let it become the entire process otherwise you're not going to be able to claim copyright.  

08:55 So you can absolutely use AI in helping you to write blog posts and helping you to create content for your memberships for your courses just make sure it's it's acting as an assistant and the actual outcome is one of human authorship. So keep that in mind. Yeah, images gets even more creative now we've been using AI on images for years, right if you think of a background remover, that's AI. And I think using AI to help edit images that you own is a great use and you're still falling into that it's human authorship. Image generators, on the other hand, I don't think, you know, are smart to use, at least personally, I wouldn't touch on this 10 foot pole and This is why now, this is still playing out in courts and things, but my personal opinion is that there's going to be a lot more issues with images and how AI tools train on them.  

09:50 I think artists are going to have a much easier time than like authors approving infringement by the AI company. And the future of AI creation is going to probably involve licensing deals that's that's my opinion, that's my take. We don't know that for sure, but I've literally seen AI generate images where you can see an art like a warped artist signature in the corner or something. And so AI can't pick up a paintbrush it can, it can do ones and zeros and throw words together, but it can't pick up a paintbrush and so I think image generation, first of all, it's not going to be copyright protected.  

10:20 So you can steal the image you would generate and there's nothing you need to do about it. Secondly, it just, I think there's going to be problems with it down the line in terms of infringing on artist copyright so personally, I don't like to use image generators. I would be very careful if you're using image generators in terms of how you're using them. So just keep that in mind it's not that you can't use AI, right i think, you know, expanding a photo to make it a different size, that's a great use of AI as long as you own the right licensing or copyright to the image you're editing.  

10:49 So, but I do think just as a personal opinion, I think what's going to lead is potentially licensing deals with artists. But if an AI company is found to have infringed on a visual artist copyright, like what does that mean for the image you create? Will you be required to pay it or you're going to need to pay for a fee or you're going to have to remove it like we just don't know. And so because of all those unknowns and the various things that are working their way through courts, I would just be very careful when it comes to using AI generated images, but absolutely use AI for editing that's been happening for years.  

11:21 Ok, So moving on, I want to talk about the new FTC rule on recurring subscriptions because you guys are potentially all membership owners, right this is very important. So this is likely to take some of, it's already in effect likely to take full effect in April 2025 It may face some legal challenges we'll see. There's a lot happening in the world right now in terms of the law and so BOI is an example it was required, it wasn't required, it was required it's on pause again so things can kind of flip back and forth.  

11:52 But as of right now, I'm going to just kind of share what this rule is and what we're looking at. So what is a new, new rule basically, it's designed to ensure that consumers understand what they are purchasing oh, there's a typo in there, apologies, and allow them to cancel their participation without undue board. Lots of typos. So it's what used to be called the negative option rule, which it's kind of a weird term, which is why they kind of changed it to subscriptions. So basically this applies to a few different types of plans these are what they're called there's the pre notification plan.  

12:24 This is where sellers provide notices offering goods and then send and charge for those goods only if the consumer does not take action, which I don't think really applies to us digital content creators. There's continuity plans so this is where consumer agrees in advance to receive periodic shipments, which they continue to receive until they cancel something like maybe a like subscription box type of thing like there's like book of the month and there's all Fabfitfun those those are kind of what comes to mind there. Then there's automatic renewals so when someone automatically renews consumer subscriptions when they expire, unless consumers affirmatively cancel the subscription so something like this could be.  

13:05 If you have maybe a membership and you required, if you're going to join, you have to be a member for 12 months, right but it's a monthly payment, but they have to stay member for at least 12 months. If at the end of that 12 months they don't do anything, it automatically renews for another 12 months. So hopefully that makes sense. And the continuity plans get applied to digital memberships as well but I do. Another one you see a lot is what is called free to pay plans where a consumer receives goods for free, like a free trial or something. And after the trial period, the seller automatically begins charging a fee unless this consumer affirmatively canceled so this is where we're seeing memberships, upsells, bundled offers, like these things can fit into different types of these are the four kinds of, you know, rules or four kinds of like different payment plans, subscription plans that we're talking about.  

13:57 So what is required basically you need to have clear and conspicuous disclosure and express informed consent. So a lot of this rule has focused on the like one Click to cancel part and I'll get to that but there's this other part that is requiring upfront, clear and conspicuous disclosure and express informed consent. So this might look like a check mark, another check mark at checkout, similar to like your terms and conditions where they're agreeing to be charged X monthly until you take action to cancel the subscription before your next bill slash charge date.  

14:29 You may easily, you know, and explaining how they can cancel, right? Having that information, that disclosure is going to be what's required. And I think it's a good business practice in general a lot of times when it comes to legally complying and protecting your digital product sales and your online business, it's a matter of just being open and transparent with your audience. A lot of these laws go into effect from companies being shady and most of us are not shady and so we want to do right by our customers anyway we want to make sure it's transparent. So this is just a great business practice even if it wasn't required, but it is going to be required so or at least it's looking like.  

15:05 So keep that in mind. That is something you will need to add to any sales pages, Check out pages where people are signing up for like a recurring fee and keeping in mind that like a split pay is different from a subscription and so what's required and looking at that. Ok. And then the much more well known, more talked about aspect of this new rule is the Click to cancel requirement so basically what this says is the seller must provide a way to cancel through the same medium the consumer used to consent.  

15:34 So if they, you know, were able to purchase via a checkout form, they didn't have to email you to purchase or something, they should be able to cancel without having to email you. Does that make sense? So it has to be easy to find the one when the consumer looks for it. It might be something in your terms or a link in your footer if you didn't require emailing to buy, they can't, you can't require them to email you to cancel right so just keep that in mind. For example, I use Thrive cart, so they have a customer hub that you can enable that allows people to manage their membership so that is, you know, kind of how they would comply with the Click to cancel rule.  

16:10 So, so let's go ahead and just recap what we learned we talked about terms and conditions, what they are and why you need them. We talked about why you don't necessarily have to file copyright or trademark in order to have them and you know where AI fits in that and we talked about the new FTC recurring subscription rules and what they mean in practice so that's really what I have for you guys today like I said, it's the tip of the iceberg, but I wanted to keep this short and sweet and focused, so thank you so much for watching go ahead and go to elizabethsabelson dot com forward slash resources. You can get this free legal policies checklist you can.  

16:45 There's all sorts of goodies on there free as well. Free workshop that really dives deeper into some of the other issues that online business owners have when it comes to the law so definitely check that out. I'm happy to answer any questions, reach out to me. Hello to elizabethsamson.com I'm super excited for you guys to get a ton of great information out of the summit and I hope this was just one piece that has helped you have a great rest of your day.