Outline – Property (Petherbridge), Fall 2006
I. Acquisition of Property by “First to possess”
a. Grab from the commons and take as private property: REAL OR CHATTEL
i. Property rights are intangible – only relative amongst persons
ii. BUNDLE OF RIGHTS: a person does not always have all of these at once, or each one in its entirety, in property
1. Possess – take a tree from the commons
2. Use – build a raft out of the tree from the commons
3. Exclude – prevent others from using the tree
4. Alienate – sell the tree taken from the commons
b. Acquisition by Capture: Grabbing property from the commons to gain the right to exclude other from the property: CHATTEL
i. ISSUE: Is pursuit of a wild resource (e.g., an animal or oil) enough to claim property rights to the animal?
1. Pursuit alone is not enough to gain rights. FIRST TO CAPTURE
2. RULE of capture: To gain property rights to a wild resource, the captor must deprive the resource of its natural liberties (exception: not valid when the captor is trespassing on land)
a. APPLICATION: look for . . .
i. Actual seizure
ii. Mortal wound AND continued pursuit
iii. Trapping
b. POLICY: this rules creates certainty over property rights versus mere pursuit being enough. 10 different people could claim to have been pursuing the animal / resource. The hunter knows exactly what he has to do, and knows exactly what animals / resources are fair game.
c. POLICY: certainty in transactions b/c hunter knows he has full rights to alienate his property, and purchaser knows he can purchase the animal / resource with full rights
d. POLICY: this rules ensures that the animals / resources are actually caught, rather than pursued and then lost. Encourages business!
e. Pierson: P was pursuing a fox when D stepped in and killed the fox. D claimed property rights to the fox. P is suing to gain property rights of the animal saying that pursuit is enough to claim right to possession. Court held that mere pursuit is not enough. P did not deprive the fox of its natural liberties. D did by killing the fox.
3. It will likely be contested of whether natural liberties have been deprived
ii. ISSUE: Is ownership of the land where the animal is caught enough to claim property rights to an animal?
1. RULE: Yes, ownership of the land gives the landowner constructive possession of the animal (the landowner does not actually physically possess the animal).
a. If trespassing on land, even unknowingly, then you must give the animal back to the landowner
b. POLICY: this goes against the rule of capture above b/c it specifically discourages trespassing
iii. ISSUE: Can a person recover their animal that wanders off and is killed or captured by another person on wild lands?
1. RULE: Yes, a person can recover possession if the animal is domesticated (habit of returning)
a. Domesticated means the animal has a habit of returning
b. POLICY: encourage domestication of animals, it is reasonable that they will temporarily wander off (to graze, etc.) but will return to the owners land
iv. ISSUE: When 2 separate parties each own one parent, who has property rights to offspring?
1. RULE of increase: whoever owns the mother owns the offspring
a. POLICY: Efficiency b/c easier to determine the mother. Efficiency b/c the mother nurtures the offspring (do not need to find food for the babies)
v. ISSUE: Can an animal owner recover where the animals escape and have no habit of returning (no domestication)?
1. RULE: An owner can recover if it is obvious the animals may have an owner
a. E.g., an exotic animal where the hunter should know that somebody brought the animal to the region and must own the animal
2. An owner cannot recover if it is not obvious the animal has an owner
a. E.g., a rabbit that is penned in a forest digs its way out and is killed by a hunter
vi. Why do we have property rights?
1. Occupancy theory: explains why we have property rights
a. Natural state (everything is owned in common as in Pierson) à Property state (individuals own property taken from the commons)
b. Property rights allow us to focus energy on productivity rather than protecting our possessions
2. Locke (Labor theory): a person has property rights in what they labor
a. The first thing a person has property rights in is oneself
b. Encourages efficient use of resources, ingenuity
c. Emphasizes 1st to occupy has rights
d. FLAWS: If pour a can of tomato soup in the Pacific, Locke might say you own it. If hire people to farm your land, the workers own the crops!
3. Externalities: a negative effect of your possession of property that does not effect you
a. E.g., building a dam on your land may destroy farming downstream, but that is not your problem, or putting up a really high fence that destroys your neighbors ocean views (negative externality)
b. E.g., driving a hybrid car creates less pollution, but that is not your problem, or keeping up your landscaping, making the neighborhood look nicer (positive externality)
4. Demsetz on property
a. Communal property: a right to possession that can be exercised by all members of the community (e.g., a sidewalk)
i. Tragedy of the commons: one person takes excess from the commons at the expense (EXTERNALITY!) of everybody else
1. Prevent this by getting everyone together and all agree to stop this activity
a. PROBLEM: This is a high transaction cost to get everyone to agree
b. Private – the right to exclude others, alienate, possess, and use
i. Demsetz answer to Tragedy of the commons
1. If give everyone an exclusive piece of the commons, then that person can only waste was is theirs
2. Concentration of the benefits
3. PROBLEM: Can lead to inefficient use of resources
c. State – the state may exclude anyone as they decide
c. Acquisition by Creation: Grab property from the intangible commons (i.e., intellectual property): CHATTEL, INTANGIBLE PROPERTY
i. Purpose of property rights in creation is to reward a person’s labor (Locke, Demsetz)
ii. ISSUE: Does common law recognize a person’s rights in their creation?
1. RULE: Yes. A person’s property rights are limited to the chattels that embody his invention unless there are rights preserved by common law or statute.
a. Imitation is not generally prohibited (Cheney)
b. Exception: unfair business competition (INS = unfair business but Cheney = fair imitation)
c. Property rights in intellectual property derived from Locke: you own the fruits of your labor
d. APPLICATION: Look for originality and creation of a chattel from the intellectual property, fair business is allowed, rights are exclusive to the chattel itself, not necessarily copying the chattel.
e. POLICY: encourage people to create
2. Case Int News Service: Common law protects AP’s interest. INS took stories from AP bulletin boards on east coast and sold to west coast publishers. AP said it was the fruits of their labor and therefore their “property in the news”, as well as unfair business practice. Impractical to copyright news stories. Court said AP cannot have property rights in the news against the general public – it belongs to the commons. However, they do have quasi property rights relative to INS, a direct competitor (focus on unfair business practice). INS has lower costs and can undercut AP, pushing them out of business, POLICY: promote productive behavior, encourage fair business. COUNTER: AP could find a way to prevent INS practice. Perhaps readers seek out the AP name so they wouldn’t go out of business.
3. Case Cheney Bros.: Common law does not protect Doris’s interest. Similar to INS, Doris (AP) put labor into finding popular designs and Cheney (INS) is taking advantage of this. Doris argues for quasi property rights relative to Cheney, but court rejects saying INS holding is specific to that case and does not apply. This case deals with damages, not an injunction for unfair business practice. POLICY: imitation discourages monopolies, keep consumer costs down (e.g., generic drugs, patent protection is only for a number of years). Cheney court is constricting INS holding.
iii. ISSUE: Are unoriginal works of authorship protected by statute?
1. RULE: No. Property is protected by copyright statute for original works of authorship fixed in any tangible medium. Does not apply to ideas, procedures, processes, systems, method of operations, concepts, principles, or discoveries. A very minimum level of creativity is required. Unoriginal works must be rearranged in a creative manner, making it an original compilation.
a. APPLICATION: Grab from the commons (like Pierson) by writing things down!
i. Was the material copyrighted and were copyrighted elements from the material copied?
b. Feist: The P telephone book was copyrighted, but copyrighted elements were not copied. Telephone numbers / names are not copyrightable elements since they were not in a creative order. Telephone listings generally are not original or creative.
c. Baker: A copyright protects printed work / description itself (the book), but not use of the ideas / process itself described by the printed work. Accounting system described in a book is not protected from use by copyright law.
d. Morrisey: Idea and expression merge into one inseparable form. Rules for a sweepstakes contest (idea) are not copyrightable b/c there are so few ways to express the set of rules. Originality is not an issue here b/c of the very limited ways to express. The same would be true if facts and expression merge. (That is essentially why facts alone are not copyrightable – there are often very limited ways to express them, so you need to be able to come up with something creative to obtain a copyright.)
iv. PATENT LAW: “…any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof…”
Benfits Cost
Encourage people to create Monopoly (which is inefficient)
Disclosure immediately Litigation
à Enrich commons Patent office (administrative)
Encourages copying Patent maintenance fees
Encourages improvement Negotiation costs
Makes the intangible discrete Inefficiencies
à transactions More expensive to pay for it now
Encourages capitalism Could we have gotten it for free?
1. ISSUE: Is a mixture of products of nature patentable as a product?
a. RULE: No. Anything made by man is patentable subject matter except laws of nature, natural phenomena, and abstract ideas
i. APPLICATION: Look to see if the patent is regarding a natural phenomenon. It may be useful, but being the first to discover a product of nature does not entitle a patent. The creator must have created something that is not naturally occurring. “Man-made.” Bacteria alone not patentable.
ii. Funk: NO patent. Sought product patent for mixing 2 strains of bacteria. Not patentable since merely combing 2 products of nature. There is no new product that was not created by nature.
iii. Charkrabarty: YES patent. Sought patent for bacteria that could break down oil. Bacteria did not normally do this – had to transform plasmid into bacteria to create this strain – not naturally occurring! Start of biotechnology.
iv. Parke-Davis: YES patent. Sought patent for purified adrenaline. Gland is changed into purified adrenaline – not naturally occurring! Started pharma industry. POLICY: encourage research.
v. Diehr: YES patent. Sought patent for direct application (process) of an algorithm / computer program used for curing rubber. Patent the combination of the algorithm with curing rubber. Did not seek a patent for the algorithm itself (which would not be patentable).
v. RIGHTS OF OWNERSHIP
1. Bundle of rights
a. Possess
b. Exclude
i. State v. Shack – cannot exclude worker’s union, but can exclude other non-work related visitors
c. Use
d. Alienate
i. Moore v. UC Regents – cannot sell body parts
2. ISSUE: Is there conversion where patient’s body part is removed and later patented? Right to exclude?
a. RULE: Improper use of the patient’s cells is not a cause of action for conversion (interference w/ ownership or right of possession). Only the doctor directly dealing with the patient is liable for lawsuit: cause of action for breach of fiduciary duty. Patient no longer has rights of ownership – no right to exclude (BUNDLE OF RIGHTS).
i. APPLICATION: Moore v. UC Regents
1. Moore did not have possession since his cells were excised.
2. He also did not have right of possession.
a. No precedent to support right of possession.
b. Statutes govern disposal of body parts, implying patient loses rights in their own person.
c. Also, a patent implies the body part has been significantly changed and no longer the same as when it was removed.
d. Conversion law is not necessary since the patient can sue the doctor for lack of informed consent or breach of fiduciary duty.
e. No reason to place liability on the innocent parties (researchers à encourage research).
f. Create certainty by placing liability on the doctor alone – the doctor must get the patients consent, not the researchers!
g. If liability should extend to researchers, the legislature needs to make that decision.
3. ISSUE: Does a landowner have a right to exclude others from entering their land?
a. RULE: Landowner may exclude others unless personal rights will be hindered (Property rights serve human values – personal rights supercede land rights).