I don't see how they can enforce this. Let's say Sue bought the fabric from LQS and it had the warning. It goes into her stash, a year later she has one fat quarter left with no selvage on it. She gives or sells it to Pam, who uses it to make a quilt that she offers for sale. She has no way of knowing the limitations.
Also, there is something called First Sale Doctrine. From Wikipedia, "The doctrine allows the purchaser to transfer (i.e., sell, lend or give away) a particular lawfully made copy of the copyrighted work without permission once it has been obtained. This means that the copyright holder's rights to control the change of ownership of a particular copy ends once ownership of that copy has passed to someone else, as long as the copy itself is not an infringing copy. This doctrine is also referred to as the "right of first sale," "first sale rule," or "exhaustion rule."
I run into this when selling books on Amazon. Sometimes you get a book marked, Not for Re-sale. It is not legally binding for eternity.