The first thing you need to understand is that by using Paypal, you have agreed to all their terms and conditions. No if's or but's. This is carved in stone according to them.
The Buyer's Protection Policy does not cover intangible items. Intangible items is a fancy way of saying a gift. In fact, anything where you are not going to receive any physical goods. As it is booked into their system as a gift to avoid paying their fee's then to them no physical goods have been exchanged, the only thing Paypal guarantees in this case is that the seller will receive your payment.

No fee = no protection = no refund.

You're on your own.