What are Master Resell Rights (MRR)?

July 24, 2024 Liscah Isaboke, Esq.

Are you interested in buying or selling a digital product that provides Master Resell Rights?

Have you bought a digital product that includes Master Resell Rights?

Are you interested in learning more about the legality of Master Resell Rights?

Stay tuned, we’ve got you covered! Here is a comprehensive explanation of everything you need to know about Master Resell Rights!

WHAT ARE MASTER RESELL RIGHTS?

Master Resell Rights (MRR) is a legal term that refers to the rights that are granted to a purchaser to resell a product, often under specific conditions outlined in a contract or agreement. These rights can be subject to various legal restrictions and obligations.

HOW ARE MRR USED IN DIGITAL PRODUCTS?

MRR have recently been heavily associated with popular digital products sold online such as online courses and e-books. For instance, numerous courses that provide MRR, such as The Roadmap, Digital Wealth Academy, and Ultimate Branding Course, have become increasingly popular on social media. Digital product creators generally can provide a limited agreement which includes the ability to resell digital products. This concept is supported by various legal frameworks and examples. For context, in the Washington Administrative Code, where a company licenses digital products to another company for further resale to end users is treated as a wholesale transaction. WAC 458-20-15503. Digital products. This indicates that the initial licensee has the right to resell the digital products to end users. Additionally, case law such as Best Hand Entm't LLC v. Wideawake-Deathrow Entm't, LLC discusses exclusive licensing rights, which include the right to manufacture, advertise, sell, lease, and license digital products in various media. Best Hand Entm't LLC v. Wideawake-Deathrow Entm't, LLC, 2014 U.S. Dist. This implies that the licensee has significant control over the distribution and resale of the digital products. The Washington Administrative Code defines digital products as: digital goods, including digital audio works, digital audio-visual works, and digital books; digital automated services; digital codes used to obtain digital goods or digital automated services; and remote-access software. WAC 458-20-15503. Digital Products.

CAN I REALLY RESELL SOMEONE ELSE’S DIGITAL PRODUCT LEGALLY?

It depends, in short, yes, you can resell a digital product bought online provided that the seller of the product has explicitly provided a license to their product that includes a master resell rights clause and in some cases private label rights (PLR). If you are unsure whether or not the seller has allowed purchasers to resell their product, reach out to the seller or their legal team directly. As a good rule of thumb, read all of the disclaimers such as the terms and conditions, terms of use, acceptable use policies, and any policies that are readily available to you. Furthermore, statutes like Sec. 151.006. “Sale for Resale”. and Sec. 12-410. Presumptions and resale certificates . [Effective October 1, 2024] provide that the sale of digital products for resale is recognized if the digital products are subsequently sold, licensed, or distributed as part of a service or another digital product to an ultimate consumer Sec. 151.006. “Sale for Resale”., Sec. 12-410. Presumptions and resale certificates. [Effective October 1, 2024]. This supports the concept of master resell rights where the initial purchaser can resell the digital products. In summary, master resell rights with digital products are supported by regulations, case law, and statutes that recognize the ability to resell digital products to end users, often with the right to grant further resale rights. This legal framework ensures that the initial licensee or purchaser can distribute the digital products in various forms to ultimate consumers.

Additionally, statutes such as 47-2-706. Seller's resale including contract for resale. and Sec. 42a-2-706. Seller’s resale including contract for resale provide that a purchaser who buys in good faith at a resale takes the goods free of any rights of the original buyer, even if the seller fails to comply with certain requirements 47-2-706. Seller's resale including contract for resale., Sec. 42a-2-706. Seller’s resale including contract for resale. This legal protection ensures that good faith purchasers are not adversely affected by previous contractual breaches. In summary, master resell rights are typically governed by the specific terms of master agreements and relevant statutes, which may impose conditions and restrictions on the ability to resell. It is crucial to review and comply with these terms to ensure the legality and validity of any resale transactions.

CAN I PROHIBIT SOMEONE FROM RESELLING MY DIGITAL PRODUT AND COPYRIGHTED MATERIALS?

Yes, you can prohibit someone from selling your digital products and copyrighted materials.

Under the Digital Millennium Copyright Act (DMCA), it is illegal to distribute products that circumvent technological measures designed to protect copyrighted works. This includes the prohibition of trafficking in circumvention tools, which are devices or services primarily designed to bypass digital protections on copyrighted materials RealNetworks, Inc. v. Streambox, Inc., 2000 U.S. Dist., 321 Studios v. MGM Studios, Inc., 307 F. Supp. 2d 1085, Universal City Studios v. Corley, 273 F.3d 429. The DMCA specifically targets the circumvention of digital walls guarding copyrighted material and the trafficking in circumvention tools, but it does not concern itself with the use of those materials after circumvention has occurred 321 Studios v. MGM Studios, Inc., 307 F. Supp. 2d 1085, Universal City Studios v. Corley, 273 F.3d 429.

Additionally, copyright owners have the exclusive rights to reproduce, distribute, and perform their copyrighted works under 17 U.S.C. § 106. This means that unauthorized distribution of copyrighted digital products can be prohibited by the copyright owner § 106. Exclusive rights in copyrighted works . Courts have upheld the rights of copyright owners to seek permanent injunctions to prevent further unauthorized distribution of their copyrighted works. Proofpoint, Inc. v. Vade Secure, Inc., 2022 U.S. Dist., Warner Bros. Home Entm't Inc. v. Zhang, 2013 U.S. Dist. In the case of IPI II, L.L.C. v. Cleveland Clinic Found., the court held that the buyer's ability to reassign or resell unpaid patient accounts was restricted by the Master Agreement, making any unauthorized assignment null and void IPI II, L.L.C. v. Cleveland Clinic Found., 2014-Ohio-700. This highlights the importance of adhering to the terms set forth in master agreements when dealing with resell rights.In conclusion, the DMCA and copyright law provide mechanisms for copyright owners to prohibit the unauthorized sale and distribution of their digital products and copyrighted materials. This includes legal actions to prevent the trafficking of circumvention tools and seeking injunctions against infringers.

WHAT ARE THE PROS OF MRR?

MRR are an important business tool because they provide individuals with the opportunity to not only use a digital product for their own benefit but also to resell it to others. This can be a lucrative business model as it allows for multiple sales of the same product, maximizing profit potential. Additionally, master resell rights can help in building a brand and establishing credibility in a particular market. By offering products with master resell rights, individuals can attract more customers and create additional streams of income. It is essential to understand the terms associated with master resell rights to ensure compliance and to fully leverage the benefits they offer.

PROS OF MASTER RESELL RIGHTS:
- Affordable Budget Friendly Option: Purchasing MRR products is generally more budget-friendly than creating products from scratch or hiring external developers.
- Buy Once, Sell Forever: When you purchase a product that provides MRR, you only have to make one purchase and can continue to sell the product long-term.
- Fast and Simple Product Development: MRR enable you to efficiently create new products by utilizing pre-existing content, significantly reducing the time and effort required for development.
- Profit Potential: You can sell the product and retain all of the earnings, possibly creating a highly profitable and lucrative income stream.

WHAT ARE THE CONS OF MRR?

MRR can have severe negative impacts on your brand and business model. By granting MRR to your products, you lose control over how they are distributed, potentially leading to oversaturation in the market. This can dilute your brand's perceived value and damage your reputation as consumers may encounter low-quality versions of your products. Additionally, MRR can cannibalize your sales as buyers opt for cheaper resold versions rather than purchasing directly from you. Moreover, enforcing quality control becomes challenging with MRR, risking customer dissatisfaction. Overall, opting for MRR may provide short-term gains but can have long-term detrimental effects on your brand and business sustainability.

CONS OF MASTER RESELL RIGHTS:
- Lack of Uniqueness: MRR products are available for resale by numerous sellers, which diminishes their exclusivity. This can lower the perceived value and appeal of the products to potential customers.
- Questionable Quality: The standard of MRR products can be inconsistent, with some items potentially being of low quality. Selling these products may negatively impact your brand's reputation and customer trust.
- Customization Limitations: Customizing MRR products is often restricted, making it hard to adapt them to your specific audience's preferences. This can hinder your ability to effectively meet your customers' needs.
- Deceptive Marketing: Certain MRR courses and products are marketed with exaggerated claims of quick earnings, often targeting those with little experience. These misleading promises can lead to disappointment and financial loss for buyers.
- Market Saturation: The MRR market can become crowded as more sellers enter, leading to an oversupply of similar products. This saturation makes it challenging for newcomers to differentiate themselves and achieve profitable sales.

HOW DO I SELL A DIGITAL PRODUCT WITH MRR (OR WITHOUT) THE LEGAL WAY?

Have iron-clad legal disclaimers on your website, attorney drafted contracts, and specific contract clauses tailored to your specific need. Legal disclaimers can be placed directly in your product (e.g., a user begins your course and the legal disclaimer which includes the terms of use are stated at the very beginning, the end, and in course materials).

Dayton Dev. Co. v. Gilman Fin. Servs., 299 F. Supp. 2d 933, demonstrates how MRR can be structured within contractual frameworks. In Dayton, the Master Lease agreement allowed an Equilease affiliate to purchase and resell fixtures under specific terms and conditions. Dayton Dev. Co. v. Gilman Fin. Servs., 299 F. Supp. 2d 933.

WHERE CAN I FIND IRON-CLAD LEGAL DISCLAIMERS, CONTRACTS, AND SPECIFIC CONTRACT CLAUSES FOR MY DIGITAL PRODUCT?

Do you want to specify how your product can be resold? Such as setting a minimum price for how much your product can be sold for?

Do you want to sell a digital product, but don’t want it to be resold?

Is someone infringing on your copyrighted material or trademark?

If you answered yes to any of the above, you’ve come to the right place. Here at Isaboke Law™, our team of experienced attorneys specialize in providing comprehensive legal contract services to protect your online digital products. Whether you are an individual creator or a business looking to safeguard your intellectual property, we can assist you in drafting a robust contract tailored to your specific needs. Our expertise in technology law ensures that your digital assets are fully protected, giving you peace of mind to focus on growing your online business. Contact us today to learn more about how we can help you safeguard your digital products with a customized contract.

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