The University of Chicago Law School Faculty Blog

Balganesh's Comments [Mobblog: The New Servitudes]

Molly's very insightful Article does an excellent job of identifying the various issues at stake in servitude enforcement and analyzing how they are likely to carry over to the world of intangibles. I’m always fascinated by the interplay between property metaphors and intellectual property, and the Article serves to highlight the fact that analogies and comparisons between the two areas can indeed be beneficial – as a matter of both policy and doctrine. Reading her Article, I had three somewhat connected thoughts.

The first relates to the “problem of the future” and its connection to a potential anti-commons situation. Molly’s principal concern in the context of both chattels and intangibles seems, in this regard, to be with resource underuse as a consequence of servitude enforcement. When the transaction costs of negotiating releases from restrictive conditions (in order to use the resource) exceed the benefits of the use, a potential user may be dissuaded from using the resource altogether. While the possibility of an anticommons is certainly a matter of concern, I wonder why we don’t have reason to believe that the common law (i.e., courts) is likely to develop pragmatic solutions to it, just as it has in other contexts, when resource peculiarities so demand.

Take the case of trespass to chattels. One of the reasons why an anticommons is more likely in the context of chattels and intangibles (as opposed to land) is because these resources have somewhat fuzzy/porous boundaries. In other words, the granularity of the resource makes monitoring, enforcing and indeed avoiding its boundaries cumbersome and difficult. If the law were to allow a trespassory action for any and every interference with a chattel, innumerable everyday situations would give rise to potential liability. Touching someone’s parked car while crossing a street, or brushing against another’s handbag in a crowded subway train – whether intended or not – would give rise to potential tort liability in the exact same way as it would if the resource were land. If individuals had to guard against the possibility of such liability in their everyday interactions, one might see such potential liability inducing inefficient behavioral modification among individuals, akin to an anticommons (e.g., you might think twice before entering a crowded train/bus, or crossing a street with cars parked on both sides).

To mitigate the potential for this inefficiency, the law actively disallows trespassory claims for interferences with a chattel (as opposed to dispossessions), unless the chattel itself is physically harmed (see Restatement (Second) of Torts § 218). Thus, merely touching a parked car isn’t an actionable tort, while scratching it with a nail certainly is. This move marks the law’s conscious deviation from the law of trespass to land, and can be explained by its attempt to minimize inefficient behavior likely to be associated with potential liability.

Why then do we have reason to believe that common law courts aren’t likely to be driven by a similar set of pragmatic considerations in their enforcement of chattel/intangible servitudes? Indeed, in trespassory claims relating to intangibles, courts have come around to seeing the same set of concerns that arise in relation to chattels (i.e., fuzzy boundaries and high enforcement/monitoring costs) as carrying over to intangibles (see Intel v. Hamidi, 71 P.3d 296 (Cal. 2003)). Taking Molly’s example then of the printer and recycable/non-recycable cartridges; why wouldn’t a court just refuse to enforce the condition for similar pragmatic reasons, given its treatment of chattels elsewhere?

This connects to my second point: the issue of enforcement, something Stewart and Sonia have touched upon in their posts already. Does it make a difference at all, whether courts enforce chattel/intangible servitudes using liability instead of property rules? In other words, if individuals (faced with a potential anticommons holdout) were to go ahead and use the resource on the assumption that courts will eventually do no more than enforce the servitude by awarding a plaintiff (or plaintiffs) damages, how is this likely to impact user incentives? Thus, if Wikipedia were to eventually move to a Creative Commons license, and users were to then recycle content (created under the original FDL), would the non-availability of injunctive relief have any impact on parties, thereby minimizing any potential anticommons-underuse?

The issue of enforcement in my mind though, goes to more than just property vs. liability rules. In some situations, disallowing an action altogether (or allowing it only when additional conditions are satisfied) isn’t a second-order choice between entitlement protective regimes, but rather a first-order decision about the existence of the right to begin with. Injecting additional uncertainty into the enforcement process (beyond just the choice of remedy), by making the very existence of the right (to the servitude) conditional, might then go a long way in deterring both inefficient enforcement and underuse. Again, the law of trespass to chattels is instructive, since the choice that the law makes isn’t just between property and liability rules, but rather between entitlement-recognition (a first order choice) and non-recognition.

My last point also connects to the “problem of the future” and relates to Molly’s concern that individuals are likely to encounter “unforeseeable” changes owing to technological developments or indeed pure serendipity, making their original licensing commitments palpably inefficient in hindsight. Again, why not look to how courts have allocated the risks associated with low-probability events in interpreting/enforcing licenses elsewhere. In allocating licensing rights associated with new technological uses, courts have for over five decades now employed a test of “foreseeability” to determine whether a new use was part of the licensee’s grant or retained by the licensor (see Bartsch v. MGM, 391 F.2d 150 (2d Cir. 1968) and more recently, Boosey & Hawkes Music Publishers, Inc. v. Walt Disney Co., 145 F.3d 481 (2d Cir. 1998)). In situations where a new use was objectively unforeseeable, the license is deemed to have excluded it, given contract law’s reliance on actual/presumed consent. If servitudes are in the end contracts, shouldn’t we expect to see defendants (and perhaps courts too) applying a similar test of foreseeability to mitigate unanticipated changes that seem to bind a defendant to more than he/she could have possibly consented to? Again a somewhat well-established common law device might serve to minimize inefficiencies associated with unforeseeable developments, that Molly identifies as part of the problem of the future.

In the end, all of my points seem to place significant reliance on the ability of courts to (i) take notice of these concerns, and (ii) develop pragmatic solutions to them incrementally, looking to connected areas for guidance. To the extent that one remains skeptical of courts’ ability to do just this, these solutions will certainly appear utopian.

Shyam Balganesh: "Demystifying the Right to Exclude"

The ‘right to exclude’ has for long been taken to be a defining feature of property as a social and political institution.  Yet, very little is known about the exact contours of this right — How does it operate? Is it absolute? Are courts obligated to give effect to it whenever a property owner asks them to? In its short (10-page) unanimous decision last term, in eBay, Inc. v. MercExchange, LLP, the Supreme Court tried to shed light on what this right means, specifically in the context of patents. Yet what it hinted at is likely to have enormous significance for the way in which the law understands the ‘right to exclude’, as it relates to all of property law.

In a paper recently posted to SSRN, Shyam Balganesh, Bigelow Fellow & Lecturer in Law, argues that a close reading of the Supreme Court’s opinion in eBay tells us what the right to exclude has really meant all along — as little more than a duty of non-interference that non-owners are placed under. Understanding property in this way allows for a more holistic analysis of the institution, one that accurately represents its functioning as an everyday matter.

The abstract is below and the full paper is here.

Demystifying the Right to Exclude: Of Property, Inviolability, and Automatic Injunctions

SHYAMKRISHNA BALGANESH
University of Chicago Law School
Harvard Journal of Law and Public Policy, Vol. 31, 2008
U of Chicago, Public Law Working Paper No. 182

Abstract:    
The right to exclude has for long been considered a central component of property. In focusing on the element of exclusion, courts and scholars have paid little attention to what it means for an owner to have a 'right' to exclude and the forms in which this right might manifest itself in actual property practice. For some time now, the right to exclude has come to be understood as nothing but an entitlement to injunctive relief - that whenever an owner successfully establishes title and an interference with the same, an injunction will automatically follow. This view attributes to the right a distinctively consequentialist meaning, calling into question the salience of property outside of its enforcement context. Yet, in its recent decision in eBay, Inc. v. MercExchange, LLC, the Supreme Court rejected this interpretation, declaring unequivocally that the right to exclude did not mean a right to an injunction. This Article argues that eBay's negative declaration serves to shed light on what the right has really meant all along - as the correlative of a duty imposed on non-owners (i.e., the world at large) to keep away from an ownable resource. This duty (of exclusion) in turn derives from the norm of inviolability, a defining feature of social existence and accounts for the primacy of the right to exclude in property discourses. This understanding is at once both non-consequentialist and of deep functional relevance to the institution of property.

EC Design Protection: A Case of Sub-optimal Tailoring?

The paper spends some time arguing that the pervasive underutilization of the EC design protection regimes by the European fashion industry is evidence of the benefits associated with a low-IP environment. On the question of why the design protection mechanisms in the E.C. and the U.K. haven’t seemingly been resorted to with any great frequency, a few points might be worth considering.

The first is that, in the U.K. at least, the interplay between four regimes – (i) the Registered Designs Act, 1949 (implementing the community registered design), (ii) s. 51 of the CDPA, (iii) unregistered design protection (Part III of the CDPA) and (iv) community unregistered design protection – has resulted in a considerable amount of confusion over the contours of each regime and the extent to which they remain complementary/overlapping/exclusive. It is then plausible to argue that the over-saturation of rights in this area coupled with the complexity involved in working them is to a large extent responsible for their under-utilization (a quasi anticommons situation – where the under-utilization isn’t of the resource, but of the rights).