Henry Smith's Comments [Mobblog: The New Servitudes]

First of all, I’d like to echo previous posts in praise of Molly’s article. It is systematic and illuminating on the question of servitudes in three related but very distinct contexts (real property, personal property, and IP), despite the theoretical and empirical difficulties servitudes have always presented. Think of poor Bigelow heroically tackling the touch and concern requirement. 

In both the article and especially in her post, Molly, correctly in my view, makes the desirability of enforcing servitudes a comparative exercise. This is truly Coasean in spirit, even if the answer does not always point in the direction of contract enforcement. As a number of posts have reflected upon, one main issue here is notice, and in particular the most cost-effective method of furnishing it. While Richard is right that systematic and centralized land records do often provide effective notice, it is an empirical question how they stack up against other methods in any given type of situation. Other methods include standardization, equitable doctrines of notice (which incidentally apply in personam and not in rem), and doctrines absolving those encountering rights from liability. Where a legal device fall between in personam contract and in rem property, we should expect intermediate strategies to deal with the potentially large but still limited set of dutyholders. See Thomas W. Merrill & Henry E. Smith, The Property/Contract Interface, 101 Colum. L. Rev. 773 (2001). 

When notice is the issue it is often important to keep in mind here that it is not information that is scarce but rather attention as Herbert Simon pointed out a long time ago. See Herbert A. Simon, Designing Organizations for an Information-Rich World, in Computers, Communication, and the Public Interest 37, 40-41 (Martin Greenberger ed., 1971). Thus, even where land records or notices printed on a product may give notice in some sense, there might still be reasons to force a standardized format (cf. nutrition information, or the terms of consumer loans). Even the land records are not a “data dump” but limit the types and form of documents that are permitted to be recorded. Format can matter. For example, a rule that rent is incompatible with fee ownership means that once one knows that an interest is a fee simple, one can stop looking for information along this dimension. Similar problems arise in contract, and are solved with a different mix of private and public solutions (making contracts shorter, enforcing reasonable consumer expectations etc.) 

One reason servitudes present a problem of informational detail is that they implement a governance strategy. Basic exclusion (keep off, boundaries) is a platform upon which we can build governance regimes, i.e. rules of proper ruse. Governance rules refine and supplement the basic exclusionary regime when particular use conflicts are important enough. Governance rules can be contractual, common law, or some combination of statute and regulation. (For an application to IP, see Henry E. Smith, Intellectual Property as Property: Delineating Entitlements in Information, 116 Yale Law Journal 1742, 1784-98 (2007).)Servitudes are a largely private governance regime. One possibility here is that courts have little problem with servitudes as long as they can be said to refine and supplement the basic exclusionary regime. Servitudes that are not refinements but unrelated (e.g. the haircut) or more than a mere refinement (e.g. going outside the copyright baseline) present information problems that normal governance regimes do not. 

A particularly interesting aspect of Molly’s paper is its treatment of new servitudes and how they implicate some of the traditional concerns with servitudes both more and less than real and personal property servitudes do. In particular, the possibility that licenses can conflict downstream is a very important point. It is a little reminiscent of water law in which property rights definition is difficult because it is desirable or unavoidable that water rights interlock tightly (the return flow issue in first appropriation is a dramatic example). One feature of basic exclusion rights is their modularity: behind the boundary a lot of “internal” information about uses and the users is irrelevant to an outside dutyholder: the interface between the owner’s property and the rest of the world (in rem) is a simple keep off. I do not need to know much about use or owners to keep off Balckacre or not to steal a car in a parking lot.

For a variety of purposes we need refinements (governance) which complicate this interface where uses interact (e.g. nuisance and servitudes). One difference between land, chattels, and intangibles is that the exclusion strategy is easier to carry out for tangible property. The baseline is clearer: in the case of land there is a physical bubble that corresponds to the module that the exclusion strategy provides. By contrast, in IP this is necessarily artificial. Thus it is easier for servitudes in IP to fail to have reference to an exclusion baseline. Some do have reference to a clear ex ante baseline, as with the creative commons licenses favoring use but within the scope of the copyright. But some of Molly’s other examples do not (as where rights to criticize are being contracted away). The conflicting license issue too would not arise if IP were more naturally modularized: servitudes here can in principle be about anything and interact with each other in any way. The modularity of land rights through spatially defined exclusion limits the extent to which servitudes will come into conflict. Owners will be aware what a servitude will “cover” (almost literally) in the case of land. (If however, we followed the Legal Realists, and assert that there is no core to the bundle of sticks of rights in land, the situation would be a lot more like the one Molly points out for software). Software as a resource does not ensure this. 

Complex interfaces can reduce transferability, as in the case of water. In some kinds of property, those setting up property desire liquidity and this more than enough incentive for standardization (financial instruments are an example). In other cases, idiosyncratic rights (fancies) may “pollute” the general informational atmosphere, making information costs for others go up. The resulting need on the part of others generally to be on the lookout for more types of information in no set format can present an externality that exceeds the benefits of the idiosyncrasy to the transacting parties. What private incentives there are for liquidity and how large the externality is partly determine the need for standardization. Also, as long as the state is involved in enforcing property rights there can be economies of scope in the state taking on the standardization function as well. 

Many of the issues in this article are of relevance to the case of LG v. Quanta now at the U.S. Supreme Court. In this regard the distinction Molly draws between commercial producing entities and individual consumers (who may have more of an everyday expectation of being able to use a physical article) is potentially a good rule of thumb. Maybe this is a subject for a future post, but for one thing, those manufacturing under a license are a more expert audience with more at stake, than in the case of consumers. There is less reason for the law to worry about the processing costs of closer, more expert dutyholders. There are many issues raised by the LG v. Quanta case, and I’d be interested in how Molly and others think this fits into her overall scheme of concerns.