"Keeping IP Real" Symposium Piece out in Houston Law Review

Is IP rivalrous?

|The Volokh Conspiracy |

I participated in this year's University of Houston IPIL Symposium in Santa Fe, New Mexico. The topic was "What's Real?—IP from a Property Theory Perspective", and the symposium pieces were just published in the Houston Law Review. Here is the abstract for my contribution, "Keeping IP Real":

This symposium contribution analyzes the relationship between intellectual property and tangible property, focusing on four types of intellectual property: copyrights, trademarks, patents, and trade secrets. It posits that—contrary to popular conceptions—the question of rivalrousness should be viewed as central both to owners' use of IP-protected goods and to others' infringement of the underlying IP rights (just as that attribute lies at the heart of the concept of real and other tangible property). Rivalrousness typically arises where consumption of a good by a consumer prevents simultaneous consumption of that good by other consumers or, in the tangible property context, where simultaneous physical occupation of the same space is impossible. This symposium piece, however, adopts an understanding of rivalrousness that rests on economic rather than physical conceptions of rivalrousness. Previous scholarship, including my own, has questioned the boundary between intellectual property and tangible property by examining binary conceptions of rivalrousness, whereby physical goods (including real property) are understood to be completely rivalrous, and intangible goods completely nonrivalrous. This piece studies in depth how "(real) property-like" the different forms of intellectual property are when it comes to economic rivalrousness, and concludes that most trademarks and trade secrets hew quite closely to our understanding of real property and other tangible property as far as economic rivalrousness is concerned. There is more variance in that respect within copyrights and patents (with the associated goods often ranging from not rivalrous at all to highly rivalrous), which suggests that there may be more flexibility in those areas when granting rights to third parties. For copyright and patent rights, economic space might be more shareable than for trademarks or trade secrets, in the sense that the goods can sometimes more easily coexist in the market without the owner of the original intellectual property suffering profit losses.

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  1. Just as an IANAL thought … what if Disney, say, always limited how many simultaneous connections it would allow for a streaming service? Suppose they only allowed one at a time — would that make it rivalrous and constitute real property?

    For the record, I think IP is a fairy tale, that patents and copyrights are nonsense. I don’t have much use for registered trademarks either, but I do think that of someone copies a trademark in order to defraud customers, that is theft of the regular kind; or if someone publishes a well-known literary work or movie as their own, that is also fraud and regular theft. But my question is just out of curiosity.

    1. But if the original movie creator still has their copy – precisely because you copied it, it can’t be theft – they haven’t been deprived of its use. That’s the point of copyright, that it allows you to control the replication of something when you otherwise would not be deprived of its use.

      Other way with trademarks though – the entire point is to communicate who made the item, so (as you point out) using another’s trademark is exactly fraud – you falsely convey the impression of provenance to presumably exchange it for a higher value. And since we have ways of invalidating trademarks that are unused that doesn’t seem to be a problem (though open to being corrected if I’m simply wrong on the facts here).

      1. That misses my point. Theft of tangible property is a harm because it deprives the rightful owner of its use. Theft of a streamed movie does not. But what if the streamer purposely limits usage to a single streaming at a time, someone copies that, and the streamer says it will not stream any more until that downloaded copy is destroyed (this is a weird hypothetical). Does that make the “illegal” download theft, now that there is actual harm?

        I suppose a more realistic hypothetical is a server which can only handle a limited number of simultaneous downloads, which is all real servers. Suppose Disney can only handle 1M simultaneous connections, 10,000 of them are non-paying pirates, and there are at least 10,000 ready-to-pay customers waiting for downloads. Does that become theft, and would it still be theft if there were only 500K active downloads and thus their connection limit was not the limiting factor?

        1. First hypo- no, because the owner is not deprived of their right to use.

          Second hypo – something like fraud and conversion rather than theft. Disney isn’t deprived of the use of the IP, but they are deprived of the use of the server bandwidth, and assuming they didn’t hack in (ex: shared credentials) then conversion seems like the best fit.

          1. Well, nuts. I am not asking a purely legal question — IANAL and don’t pretend to be. I am probably asking a more Economics question if need be — is there any merit to the argument that by artificially restricting supply, I can convert a download into theft.

            Nuts.

            1. Yeah, I’m looking at this from a moral philosophy perspective, heavily leavened with economics (which is why conversion sounds right – where a person lawfully possessed someone else’s property and then converted it to their own use – classic example is a valet refusing to return your car).

          2. You need to define “use.”

            It doesn’t just have to mean “viewing the movie.” Renting it to would-be viewers, especially from a monopoly (on that movie) position is also using it.

            If you own a hotel, you can use it by sleeping in one of the rooms, or by renting out the rooms.

            1. Exactly so.

              In the first hypo owner still rent or sell their movie – that only encumbered if enough others obtain copies to dry up the market.

              But in the second hypo the owner loses that right because of (essentially) squatters.

  2. Before reading your piece I’d though that of course IP isn’t rivalrous, as it can be duplicated without loss of the original.

    On reading, trademarks are obviously rivalrous – thats the very point of them. Trade secrets are analogous to a trademark – it’s a distinct thing that makes the owner unique, but since it only exists to the extent that it’s kept secret I’m sure sure of the real applicability (and I haven’t thought about espionage cases enough to have an opinion there).

    But I really don’t understand your point on patents and copyright. If I create something that I invented to solve my problem, but you invented previously, you have it been harmed. You haven’t even been harmed if I then sell my item. You’ve only had your exclusivity taken from you if I read your patent and incorporated it into my product, because the alternative for you is a trade secret – so the inventors trade off is guaranteed monopoly and publication, or no monopoly and secretiveness. But if you keep it a secret and I develop the identical item you haven’t been harmed – you can continue to use your secret, only it’s now in the open once I file a patent for it. So we can both use it infinitely, and your only harm is my competition because of your disclosure; but if I didn’t use that disclosure then the invention is still non-rivalrous – I would have invented it regardless of your disclosure. Proof on this is a different matter, of course.

    Copyright is even more clearly non-rivalrous, though a particular instance of that will often be. Suppose I have a Wu Tang Clan album, and I make a copy of it and let you down load it from me. I still have it, and now you have it, so the copyrighted work itself isn’t rivalrous. But if that album I have is the one Martin Skrelli had, of which only one copy had ever been made and no one else has ever heard the songs then the album itself is rivalrous in its physical form. But again, if I make a copy of it, the copy is non-rivalrous – I lose nothing when you gain.

    So I’m really not even following that limited edition example in your article – it’s the physical instance that’s rivalrous, the copyright has nothing to do with it.

  3. I think the real problem is insisting that intellectual rights be categorized as “property”.

    It works better to just consider these things torts. Indeed, trademark infringement arose out of unfair competition and false advertising claims, which WERE torts. And the various damages schemes for intellectual rights violations award tort damages (compensatory with very liberal proof requirements plus some form of exemplary), whereas in many types of property disputes you can’t get punitives and when you can, it is subject to both constitutional limitations as to amount and common law limitations to the most egregrious forms of conduct.

    Using the word “property”, in my experience, causes intellectual rights holders to believe that they have more rights than they have. Instead of thinking “am I injured?” (the central question of tort law), they think “I own this, nobody else can use it without my permission” (the central principle of property ownership).

    I think courts should push back on this. I think courts should reject the characterization of “property” and speak of these claims as the torts they are. I think courts should explicitly rule that they are not property, and analyze infringement claims through a tort framework focusing on actual injuries as well as competing interests and privileges.

    1. So we’d need to stop calling it “intellectual property” and start calling it “constitutionally sanctioned exceptional license” (needing a better name, of course).

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