1. People doing "all out" commercial projects are not going to Hancocks to purchase 100% cotton fabric. Which as we all know wrinkles a lot.
2. There is NOTHING in federal law that states a restriction on the selvage of the fabric means anything to the purchaser. Actually there is There is something called equitable servitude in the law.
Attaching a fair condition to use can only be done with the consent of both parties in writing.
If the manufacturers want to enforce something they have to get you to sign something when you purchase the fabric.
Couple of court cases
Precious Moments v La Infantil, 971 F. Supp. 66 (D.P.R. 1997). Precious Moments sues to stop La Infantil from making and selling bedding from copyrighted, licensed fabric. Court ruled bedding items manufactured with lawfully acquired, authentic fabric with copyrighted design were not infringing derivative works, Court did require La Infantil to attach a notice with a disclaimer. Precious Moments lost because of the First Sale Doctrine.
Scarves By Vera, Inc. v. American Handbags, Inc, 188 F. Supp. 255 - US: Dist. Court, SD New York 1960. Vera markets a line of women's products and accessories. American Handbags began using her towels with her logos on them to make handbags. Vera sued. The court dismissed her claims but did require American Handbags to include a better disclaimer.