Van Houweling Responds: The Affirmative Case for Enforcing Servitudes [Mobblog: The New Servitudes]

A number of themes have emerged from the comments so far.  I’ll jump back into the fray by addressing--for starters--the question of the affirmative case for enforcing servitudes. 

Both Stew and Randy are interested in exploring the affirmative case for enforcing servitude-like arrangements in the intellectual property context.  Stew reminds us of one element of the affirmative case in the land context:  “the servitude was the only effective mechanism for a landowner to deal with the monopoly power of his neighbor.”  And he asks whether enforcement of IP servitudes would also yield efficiency gains. 

Randy suggests that the answer is yes--pointing to price discrimination (which Lee also mentions) and systems competition as two examples.  Richard refers more generally to the “superior internalization of costs and benefits” that enforcement might yield.  The literature suggests additional possibilities.  Consider, for example, Henry Hansmann and Reineir Kraakman’s observation that coordinating downstream treatment of artwork can protect and promote an artist’s valuable reputation:  “The value of one work by an artist generally depends heavily on the quantity and quality of the artist’s other works. . . . The destruction or alteration of individual works can therefore damage the artist’s overall reputation and thus decrease the value of the artist’s other works as well.”  Hansmann & Kraakman, Property, Contract, and Verification:  The Numerus Clausus Problem and the Divisibility of Rights, 31 J. Legal Stud. 373, 409 (2002) (pre-print version).

First, let me acknowledge the importance of addressing (and assessing) the affirmative case.  In The New Servitudes I focus primarily on the concerns raised by servitude enforcement across the contexts of real, personal, and intellectual property.  But in order to figure out what (if any) doctrinal and policy implications should be triggered by those concerns (as I hope to do in ongoing work), I of course need to weigh both the costs and benefits. 

Let’s focus for now on two potential benefits:  facilitating price discrimination and protecting creators' reputations.  Elsewhere I have briefly discussed the potential benefits of price discrimination for poorly-financed players in the copyright marketplace.  (See Distributive Values in Copyright, 83 Texas L. Rev. 1535,1569-71 (2005).)  As for protecting reputations--I see this as a minor theme in copyright, one that looms increasingly large with the rise of technologically-empowered creators who appear to be more motivated by reputational rewards than by the monetary rewards more traditionally associated with the exclusive rights granted by copyright law.  Indeed, reputational benefits are an important explanation for the growth of the free- and open-source software movements, and they seem critical to many Creative Commons licensors as well.

(I should say something here about how the servitude mechanism may be superior to other mechanisms--e.g. negotiated bilateral contracts--for facilitating price discrimination and protecting reputations.  For now let me concede the point that seems to be motivating some of Richard’s enthusiasm for the servitude mechanism:  those alternatives would be a pain in the neck.)

So should the benefits of enforcing servitude-like mechanisms that facilitate price discrimination and protect creators’ reputations trump the concerns I raise in The New Servitudes?  I’m not ready yet to offer a definitive answer, but I’ll introduce one way of thinking about the problem. 

We might say that intellectual property law itself acknowledges the need to coordinate uses of intangible works in ways that are more ubiquitous and durable than mere contractual agreements would be.  (Stew alludes to this when he points out that “[c]opyright itself is largely premised on the fear that creators of intellectual works cannot contract with all potential users, and that without statutory protection an author would be at the mercy of any user who could reproduce, display, produce derivative works, etc., thus destroying the market for the author’s work.”)  As I point out in the article and in a companion piece, the mechanism that intellectual property law deploys to achieve this coordination is itself servitude-like (creating non-possessory property rights that limit what end-users may do with a thing in their possession).  And, indeed, intellectual property itself triggers many of the concerns I associate with servitudes. 

So one way to think about the cost/benefit question is this:  Congress has already weighed the costs and benefits of servitude-like protection for intangible works of creativity and invention.  The results of that cost-benefit analysis are embodied in copyright and patent law--which create running restrictions but also impose limits (first sale, exhaustion, fair use, etc.) that address at least some of the concerns raised by servitude enforcement.  On this view, efforts to impose servitude-like restrictions above and beyond what is provided for by copyright and patent are (at least presumptively) invalid, because they upset the balance established by this Congressional scheme. 

(An aside:  I look forward to seeing what Henry has to say on this topic.  It seems to me that this approach resonates with some of his writing about the numerus clausus principle--in particular the points that he and Thomas Merrill make about the relative institutional competence of legislators versus common law courts when it comes to creating new types of property interests.  See Thomas W. Merrill & Henry E. Smith, Optimal Standardization in the Law of Property:  The Numerus Clausus Principle, 110 Yale L.J. 1, 58-68 (2000)).

To me, this approach has the virtue of taking seriously everything that Congress and the courts have said about the importance of the various balances built into intellectual property law.  On the other hand, the balance that Congress has struck as a general matter may not be the ideal way to promote creativity and innovation in individual cases.  The assumptions that Congress has made about what typically motivates creators and innovators may justify the general contours of intellectual property law without negating the possibility that some creators have idiosyncratic preferences that could be most effectively enforced via servitudes--and that serving those preferences would benefit society by inducing the production of new works, or better works, or works by a wider variety of creators, etc.  (Not to mention the possibility that the Congressional balance has been rendered obsolete by changes in technology and transaction costs--a possibility that Randy raises in From Edison to the Broadcast Flag.)

But this brings us back to the costs of servitudes.  It’s one thing (albeit not an unproblematic thing--an issue to which we might return) to expect consumers to understand the generally-applicable background law of copyright and patent.  It’s something else to expect them to parse every unilaterally imposed idiosyncratic variation.  Furthermore, even putting notice problems aside, enforcement of some of these idiosyncratic preferences will surely not be efficiency-enhancing.  It’s particularly easy to imagine reputation-protection run-amok.  (“By opening this book you agree never to say anything bad about it or its author.”)  Lee and Richard have both suggested that we have other sources of law (antitrust, civil rights, Lee’s Fair Housing Act analogy) that might take care of some of these concerns (which would be raised to some extent even by traditional contracts with similar terms).  I hope to return to that issue in a separate post.