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BASIC THEORIES
I. What is property?
a. Property is whatever interest in a thing—whether tangible or intangible—that is protected against invasion by others by the legal system of the society. That means that the study of property is not the study of the relationship of a person to a thing called property, but is the study of the relationship between people with respect to things we call property.
b. Bundle of Rights – the right to possess, the right to use, the right to exclude, and the right to transfer
c. Three core elements:
i. The right to exclusive possession
ii. The right to exclusive use
iii. The right to dispose or transfer
II. Blackstone – Occupancy Theory/Principle of First in Time
a. Originally, property rights were transient
i. Pick up a bunch of apples, as soon as you put them down and walk away, others can pick them up
b. But because avarice eventually led to scarcity, the institution of private property became necessary to preserve peace.
c. Taking possession of an unknown thing is the only way to acquire ownership of it
d. “The notion that being there first somehow justifies ownership rights is a venerable and persistent one.”
e. Whatever a person has taken possession of is that person’s property
i. Institution of property was an agreement among men legalizing what each had already grabbed, without any right to do so, and granting for the future, a formal right of ownership to the first grabber
ii. In fact, the “own” which property laws protect is whatever an individual has managed to get a hold of, and equality of right, applied to property, means only that every man has an equal right to grab.
iii. As a result of this agreement, which, by a remarkable oversight, puts no limit on the amount of property any one person may occupy, everything would soon pass into private ownership, and the equal right to grab would cease to have any practical value.
f. Leads to productivity because creates scarcity of resources
g. [Note: This line of thought runs through the Acquisition by Capture]
h. Challenge:
i. Not many things left to grab—no longer an equal right to possess them
III. Locke –Labor Theory
a. So what if someone possesses something first; why should else be obliged to respect that claim of the first possessor?
i. Locke reasoned that the obligation “was imposed by the law of nature, and bound all men fast long before mere human conventions had been thought of.”
b. We have no inherent right in land. All we own is our bodies. Mixing labor with something unowned makes it yours and establishes your right to it.
c. If you take your labor and mix that with some common property, your right to that property must be greater than anyone else’s right to that property.
d. Law of Accession – when one person adds to the property of another: by labor alone
e. Challenges:
i. Multiple people can contribute labor
ii. Law of Accession
IV. Benthem – Utilitarianism
a. Property is a human construction that depends solely on societal needs *
i. BY CONTRAST: Natural rights theory insists that property is independent of any of society’s declarations.
b. The greatest good for the greatest number (in the aggregate)
c. We protect other’s possessions because we desire the same protection of our own possessions
i. Result of scarcity; must protect what we possess
d. Property law is a social construct—people create property law in order to arrange their affairs—we should judge property rights by happiness/utility (social effects)
e. Majority *
V. Demsetz - Economic Efficiency
a. Property is economically efficient (efficient response to scarcity)
i. Efficiency is utilitarian
ii. Externalities are internalized
1. This makes production more efficient
b. If everything is unowned, or owned communally, under conditions of scarcity people will unduly deplete the resource because the individual gain from depletion is greater than the individual cost. Yet, from society’s perspective, the aggregate gains from depletion are less than the total cost. To an individual, these additional costs are external. Property helps to internalize these costs so that individuals make economically efficient judgments.
c. Externalities: costs that are produced by an activity but not borne by the person reaping the benefits of the activity. Internalized when property rights are created.
i. Externalities are reciprocal; they arise from interactions or conflicts among people in the use of resources.
d. Tragedy of the Commons: dilemma arising from situation in which multiple individuals, acting independently, and solely and rationally consulting their own self-interest, will ultimately deplete a share limited resource even when it is clear that it is not in anyone’s long term interest for this to happen.
e. Tragedy of the Anti-Commons: people cannot use a resource, so it is wasted
i. Problem aggregating all of the rights to get things done (transaction costs)
ii. An anti-commons refers to property which a number of people control, and thus many people have the right to exclude others or to veto a transfer.
iii. The antithesis of a commons, which is property for which on one has the right to exclude *
iv. An unanimous consent requirement in a common interest community illustrates property whose use and transfer is subject to approval by multiple parties
f. Free Rider: one that takes advantage of something in common that he doesn’t have to pay for
g. Private Property: right to exclude others, internalizes cost
i. The owner enjoys both the benefits and the costs—they have to account for costs (make better/more efficient decisions)
ii. Transaction costs reduced—will not need to negotiate
VI. Coase – Transaction Costs
a. In a world without transaction costs, it does not matter to whom you assign property rights. Resources will be put to an efficient use in any event.
b. The person that values the resources most will automatically acquire it
POLICY CONCERNS
I. Reward productivity and foster efficiency
II. Create simple, easily enforceable rules
III. Create property rules that are consistent with societal habits and customs
IV. Produce fairness in terms of prevailing cultural expectations of fairness
V. Private property is essential to political freedom (alienability)
POSESSION
I. First Possession
a. The common law gives preference to those who convince the world that they can catch the fish and hold it fast. This may be a reward to useful labor; but it is more precisely the articulation of a specific vocabulary within a structure of symbols understood by a commercial people. It is this commonly understood and shared set of symbols that gives significance and form to what might seem the quintessentially individualistic act: the claim that one has, by “possession,” separated for one’s self property from the great commons of unowned things.
b. Acquisition by Capture
i. Unowned property that is captured becomes the property of the capturer through actual possession
ii. Wild Animals (farae naturae) – usual method of acquiring property in an animal is to actually capture it (dead or alive)
1. Pierson v. Post – P pursued a fox on an unowned beach. During his pursuit, D (knowing that P was in pursuit) intercepted the fox, killed it and carried it off. Court held that pursuit is not enough to show possession must have actual possession of the animal.
a. The pursuer:
i. Manifests an unequivocal intention of appropriating the animal to his individual use
ii. Has deprived him of his natural liberty
iii. Brought him within his certain control
iii. Constructive Possession
1. Things on your land are yours because you have an interest in them. A trespasser, who captures a wild animal on the land of another, has no rights against the owner, even though landowner never had possession or control.
iv. Oil/Gas –Usually Treated The Same As Wild Animals
1. Classified as wild animal because it has the power and tendency to escape without the volition of the owner.
a. The resources have a fugitive character because they wander from place to place.
i. Oil and gas once under the land of A might migrate to space under the land of B as the result of natural circumstances or because B drops a well and mines a common pool beneath A’s and B’s land. The oil or gas mined by B may even have been placed in the pool by A (gas and oil extracted elsewhere are often reinjected for storage or secondary recovery).
b. The resources:
i. “Belong to the owner of the land, and are part of it, so long as they are on or in it, and are subject to his control; but when they escape, and go into other land, or come under another’s control, the title of the former owner is gone. Possession of the land is therefore not necessarily possession of the gas. If an adjoining, or even a distance, owner drills his own land, and taps your gas, so that it comes into his well under his control, it is no longer yours, but his.”
ii. When they escape or are restored to their wild and free state, the dominion and individual proprietorship of any person over them is at an end and they resume their status as common property.
c. Policy Concern:
i. Denies society at large the benefits of economical underground storage.
v. Escapees and Domesticated Animals
1. When a wild animal escapes—it is unowned. It belongs to the next first possessor.
2. Domesticated animals are not wild, so they continue to belong to their prior possessor when they wander off.
a. A wild animal becomes domesticated when it demonstrates a propensity to return home.
vi. [You cannot acquire possession to a federally protected animal]
c. Acquisition by Creation
i. A person acquires right to something by creating it
1. In accordance with Locke’s Labor Theory, if you create something then it is yours to exploit because the foundation of proprietary rights is the expenditure of labor and money.
2. The assertion that if you create something—if in that sense you are first in time—then that something is most certainly yours to explit.
ii. Intellectual Property
1. Exclusivity: key issue because some argue that information can be used by many people at once, thus the owner should not be able to insist on exclusive possession
a. Many people can use the same piece of information *
b. Granting exclusive rights to information does not necessarily promote a market economy. Competition depends on imitation.
i. The public as a whole may be better off, as long as this freedom to imitate does not destroy the incentive for people to come up with new devices.
2. Monopoly
a. The point of monopolies is to promote creative activity; the point of the limits is to advance competition (which in turn facilitates consumption by holding down prices).
3. Law of misappropriation – the branch of unfair competition law that protects new ideas—tries to answer the question of when imitation is permissible and when it is not because it will destroy the incentive to create
4. International News Service v. Associated Press – P claimed that D was pirating its news. Court held that there is no property right in the news itself, but there is a property right in the literary form because of the labor put into it. Exception to normal rule that property can be imitated.
a. There is quasi-property in the news that survives publication as between competitors appropriating it for profit, not to the public at large
b. Publici juris – public domain/of public right
c. Information – multiple people can use it at the same time, no worry of overusing the information (won’t deplete)
5. Absent Statute – No Intellectual Property, imitation is fine
a. Cheney Brothers v. Doris Silk – P copied popular designs of D. P asked for protection only during the season in which it debuted. Court held that a man’s property is limited to the chattels, which embody his invention; others may imitate these at their pleasure. (Ok to copy and undercut price)
6. Smith v. Chanel – P copied D’s perfume and used their name to advertise that its price was lower, but the product was equivalent to the un-patented item. Court held that they were allowed to copy product and claim that it was cheaper because this stimulates the economy.
iii. Copyright
1. Applies to:
a. Original works of authorship
b. Fixed in tangible medium of expression
2. Expression of ideas in books, articles, music, or artistic works
3. Protected as soon as set down in tangible medium
4. Generally lasts 70 years after death of creator
5. Subject to “fair use” (e.g. can quote something that is copyrighted)
6. Fact/Expression Dichotomy
a. Feist v. Rural – Feist did not copy anything “original” by taking 1,309 names, towns and telephone numbers from Rural’s white pages. To qualify for copyright, information must be original to the author, and meet a minimum standard of creativity. Facts are not copyrightable, but assortments of facts are so long as they are compiled or arranged in an original or creative manner. The court held that Rural’s white pages did not meet the minimum standard of creativity.
7. Idea/Expression Dichotomy
a. Baker v. Seldon – Seldon featured a condensed ledger in his books. Baker sells the ledger from Seldon’s books. The court held that the description of the art in the book lays no foundation for an exclusive claim to the art itself (ideas cannot be copyrighted).
8. Merger or Idea/Expression Inseparability
a. Morrissey v. Proctor & Gamble – P alleged that D copied their sweepstakes entry. The court held that where there is only one or but a few ways of expressing an idea, courts may find that the idea behind the work merges with its expression with the result that the work is not copyrightable.
9. Conceptual Separability
a. Brandir v. Cascade Pacific Lumber Co. – The court held that the P’s ribbon bike rack is not copyrightable because the utilitarian function cannot be separated from the aesthetic value of the rack.