NARRATOR: Thanks for joining this episode of the No. 86 lecture series, where we discuss the foundational principles of Property Law as well as current topics in the academic literature. Today’s episode features James Stern, Professor of Law at William & Mary Law School. His scholarship centers on property and private law theory and on intellectual property, privacy and related issues. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. PUBLIUS: As we discussed in other episodes, the term “property” can apply to a lot of things and give rise to complex rules. In this episode, I want to focus on a particular type of property - intellectual property. What is IP? Is it governed by the same rules as tangible types of property? JAMES STERN: Intellectual property is a domain of different systems of private rights that we establish in law that operate in a way that's very analogous to conventional property in land or in tangible physical items, or even in other kinds of intangibles that we recognize as property like your bank account, which is not physical, but which we think of as being yours. Intellectual property is, broadly speaking, it's a category that in US Federal Law embraces a couple of different major categories of areas that can be protected. We protect inventions that inventors come up with, basically new technologies. That's the domain of patent law. We protect expressive works. They may be creative like a fine painting or a sculpture or they may be quite technical like an owners manual, but where we're dealing with expressive communicative works, protections may be available under the law of copyright. Both of those are contemplated and expressly authorized in Article One of the Constitution, which grants Congress the power to create patent and copyright laws. We also have trademark laws. Trademark laws protect essentially brands or business names the names that are used and other ways of signifying where particular products come from or that a particular set of products comes from the same place. Whether it's your Nike Swoosh or any number of other ways in which we signify that a product comes from one particular source and not from another. In trademark law, although not originally contemplated as one of the expressed powers of Congress under the Constitution, is today authorized in the exercise of congresses powers under the Commerce Clause and there's a pretty straightforward connection between trademark and interstate commerce because by in large that is the area in which branding occurs. It is an aide to commercial transactions in order to know when you're buying something. Who made it? Is this a real Rolex or not? Is it Live or is it Memorex? Is this the real McCoy or is this a fake? Trademark Law helps with that. There's a newly federalized, although this area of law has long existed at the state level, we now have federal protection for trade secrecy law for proprietary information. Information that's kept private by commercial firms. Basically you can think of this as a privacy law for businesses where the information that businesses put together that's valuable to the business, and is actually kept secret, receives some protection under law against unauthorized disclosure by others. Intellectual Property is similar to more conventional kinds of property in some pretty fundamental aspects. One is that we're talking about rights to control the uses of different entities. Now here there are intangible ones, it's the right to, for example, make, use or sell a patented mouse trap design let's say. So, we're not talking about Blackacre, we're not talking about a piece of physical space, we're not talking about a car or a shirt or a suitcase, a physical object and we're not talking about other kinds of intangibles like a bank account, but that same structure applies where there is an identifiable owner, we might say, or someone in a position analogous to the owner of a physical resource who gets to decide whether or not a particular use is allowed. That's a major point of similarity and it is subject to the kind of Mutual Exclusivity Principle that I've written about in my work and you can still have some very significant questions about who owns some particular thing. Here it's a notional thing, it's an abstraction that doesn't have a physical presence, but we still can have titling disputes over who owns a copyright, who owns a patent and so forth. Really, if you think of a patent or a copyright as representing itself a kind of ownership, the question is who owns the thing that's subject to copyright? Who owns the thing that's subject to the patent? Those are some pretty significant similarities. On the other hand, there are some differences. In the world of physical property, particularly when we're talking about physical objects, the boundaries of the object tend to be pretty self defining. You can tell where a necklace begins and ends, that's not hard. Furthermore, it can be pretty clear whether or not a particular object you come across is an object of private property at all or whether its just not property in the first place. When you walk down the street you've got a pretty good idea what's private property and what's not. When you're on the sidewalk, versus when you're on someone else's land. When it comes to something that's subject to patent or copyright, you might not know that. You might not know that there's a patent or a copyright at all and you might not know that patent or copyright extends to the particular activity that you're engaged in, that can happen more with copyright than with patent. And it can be hard to know exactly what the boundaries of the protected item are. What is the limit of the technological principle that's embodied in my patent? What would count as copying my, let's say, the plot of a movie that I wrote or copying a musical composition that I wrote? There can be much more difficult boundary questions in those situations and likewise also with other areas of IP. I focused on patent and copyright, but those same kinds of issues can come up in trademark law too. Just what is the limit of the rights that you have in your particular branding symbol? Different companies might have very similar names or even the same name but be operating in different places and selling different things. Does that count as infringement? You get difficult questions like that. Because of the kinds of differences that are presented when it comes to what you might think of as ownership of these sometimes diffused intangible things, the rules can be quite different in some important ways between intellectual property and conventional physical property. There can also be, there are, some major differences among different forms of IP. Copyright and patent, for example, differ in a very important respect, which is that copyright only protects against copying. Whereas, patent protects absolutely. It protects even against independent inventors of the same technology. In copyright, if two different people compose the same melody there's no copyright infringement, but in patent law if two people invent the same drug to cure the same disease there would be patent infringement if one of them goes ahead and uses their invention. Then there are differences, some major differences, between IP and physical property. At least between different forms of IP. Patent and copyright exist only for a limited period of time. Patent and copyright protection. A patent law protects an invention only for 20 years. Copyright law generally protects an authors' creation for the authors' lifetime plus 70 years. After that a work enters the public domain. That is not the situation when it comes to land. We don't say, at least under our law in general, we don't say after a period of time land just goes back into the public domain and whoever is the first to stick their flag in it get is, or rather it becomes public and can never be owned again. We don't say that. So, that there is a very significant difference between the way at least two of the most important forms of IP operate compared to property in physical resources. There are lots of other differences along the way, but there are also differences among different types of physical property as well. Ownership of water rights is a different undertaking than ownership of a car. The rules differ in those respects and the same thing is true across IP. It can be hard to come up with a singular generalization that captures all of these things. At the same time, what is clear is that there are some pretty strong basic similarities between IP and physical property, but also at many different stages some important differences in the way that IP operates. PUBLIUS: So there are a lot of similarities to tangible property but not a perfect correlation. Does anyone dispute whether intellectual property has the essential characteristics of property? Or is it just called property by analogy? JAMES STERN: The question whether IP is property or not is something that a lot of people debate in a lot of definitely context. It can mean different things in different context. One obvious one is, is there constitutional protection for IP rights, say, under the Taking's Clause? That's a big and important question and the determination there is going to be driven by various different factors, but in other situations sometimes what's being talked about it is whether IP rights in any particular regime should be or how closely, how much we can draw from traditional property concepts to figure out what the rules within an IP system should be and especially should the protection granted under IP Law be more absolute than it might otherwise be because that's how we imagine property in land or property in physical objects as being. All of that aside, what I do think because those are some pretty fraught debates, what I do think is worth noticing is that traditional property or conventional property and physical things and land and so forth, there's a lot of understanding there. A lot of people have written about these issues for a very long time and there's a lot of thought and insight that can be gained from those areas and I think a lot of the teachings of traditional property law, or at least some of them, can usefully be brought to bear within IP. One of the areas where that's the case is the awarding of IP rights. In conventional property law we have these debates over how we should go about awarding property rights in the first instance under, say, a capture regime. The basic question presented in a case like Pierson versus Post. Well although, the kind of Pierson versus Post scenario where unowned things are being claimed, is maybe not so characteristic of the everyday life of property and land or property and physical objects, we don't have to worry about that so much. That's not so much of a live issue. It is a live issue in IP and I think there's a lot to be learned from the traditional study of property and land and physical objects when it comes to IP. Understanding the basic trade offs that are presented, if you award rights too early they may end up in the wrong hands, you may end up awarding property to someone who is not capable of following through and making the best use of property and if transaction costs are high, you therefore end up in a situation where the wrong party, you've just made a mistake that's not easily corrected. On the other hand, I you wait too long to assign ownership it can be the case that you have a really discouraging, dis-incentivizing effect where actors early on in the process of trying to appropriate a resource, to make it useful and valuable are basically called upon to make an investment that won't be rewarded in the end because the final step of capture can be performed by someone else who swoops in at the last minute, just like in the classic examples of Pierson versus Post or the 19th century whaling rules and other situations like that. You end up waiting too long and you have too much of a discouraging effect on peoples willingness to undertake the investments necessary to complete the process of appropriation. Then on top of all of that, you've got those classic concerns that you see in Pierson versus Post and similar cases, about giving notice to the world about clear rules that others will understand and that will be visible and comprehensible to others, that comes into play too. In different ways within copyright, patent and trademark law, especially patent and trademark law, I think you can see those same kinds of trade offs at work when it comes to determining just how far along you have to be in order to be able to claim a resource as your own. In general, for example, in patent law we say to get a patent it's not enough that you be close, you have to actually have figured out how to make a workable, usable, version of your invention although we don't require that you have all the regulatory approvals and we don't require that you have perfected your method, so long as it works at all, but it does have to work. You have to have actually completed that process. In trademark law we say, you get protection only once you've started using a mark and if it's a descriptive mark, only once its become recognizable as such to a portion of the consuming public. I think all of that is consistent with general thinking about a rule of capture and how it is that you assign claims, how you assign rights within a traditional property framework. PUBLIUS: Let’s step back for a minute. You mentioned patent, which is a basic category of intellectual property. Can you explain what a patent is? And how is it different from copyright and trademark? JAMES STERN: So, at the basic level of how rights are allocated between the patent, copyright and trademark legal systems, how they differ and how they are the same from each other. Just a basic overview is probably a good place to start. Patent law protects new, useful and non obvious technological improvements. So, in order to obtain a patent the material in question has to be new, someone else can't have invented it before, it has to be useful, although that's not a particularly rigorously enforced requirement and it has to be non-obvious. It has to be the kind of thing that people who work in the area where the invention occurred wouldn't, as a routine matter, have thought of when presented with the situation in question. There's got to be maybe some level of difficulty that's involved or some improvement over, what in Patent Law we call, the prior art. When that's the case you may be entitled to a patent, but to get a patent you have to go to the US Patent Office. If the Patent Office doesn't grant you a patent you have no patent rights. The system in that sense has a major administrative component without the granting of the right by the patent office you, you apply for it, and unless the patent is granted you don't have any patent rights. You can challenge the decision of the PTO, the Patent and Trademark Office, and maybe ultimately prevail in your challenge, but ultimately the patent has to be granted for you to have protection. In Copyright Law, by contrast, there's no administrative apparatus equivalent to the Patent Law system, but let me first describe what copyright protects. Copyright protects expressive works. What in the Patent Act are described as works of authorship that are fixed in a tangible medium of expression. This is a gloss on the Constitutions reference to protection for the writings of an author. We understand this broadly so that the writing of an author includes a sculptors sculpture and it includes a recording artist's rendition of a song or a poem or anything else that's fixed in a sound recording, but there has to be that. The material itself is something that has to have, I wouldn't say necessarily an artistic dimension to it, but it has to be creative, it has to be original in the sense of not copied from someone else, has to demonstrate what the Supreme Court calls a modicum of creativity, and it has to have in doing so some value that can be thought of as expressive or communicative. It has to act through your cognition or your sense to in some way effect your mind or your mood, you might say. It has to communicate information to you or aesthetic sensibilities or something like that. In other words, you can't get a copyright in your mousetrap design. That we think of as material technology. That goes in the patent bucket. Copyright is all about different ways you can express yourself or communicate to others whether books, movies, films, sound recordings, architecture, and so on. That's the domain of Copyright Law. Copyright protection in general, springs into being the moment you, sort of speak, put pen to paper. The moment your creative work leaves your head and is embodied in some physical form that records your work, sort of speak whether that means writing on paper or making an audio tape of your thoughts or putting your brushes to your canvas, that's when your work come into being. You don't have to go to the copyright office to get protection. We do have a Copyright Office, but that's a place where you can merely register the fact that you believe you're entitled to copyright and others can go and search for that. The Copyright Office doesn't have to approve or sign off on your claim to copyright in order for you to have protection. It just happens all on its own. Those are the two constitutionally recognized areas of Intellectual Property Protection. The third big statutory one, trademark law is in some way a hybrid of the two and it doesn't have an explicit constitutional foundation, it's grounded in the Commerce Clause in Congress's power to regulate commerce among the different states. Trademark law comes into being in the first place, when you use a mark in commerce. What's a mark? A mark is a way in which you distinguish your goods or services or product from those of another. It doesn't necessarily have to identify who you are, but it does have to serve as a way of indicating that a particular set of products comes from the same place. It's basically, you might think of it broadly speaking as a signature mark of a particular supplier of goods or services. Whether it's the name Coca-Cola or their logo, whether it's the NBC chimes, anything that serves this function of serving to separate out one set of products from another. The reason for trademark law protection, we say broadly speaking, is to reduce consumer search costs. At the core of that is a concern with protecting against what you might think of as a fraud. Of selling products pretending to be someone else's, but even without that it also serves simply to help differentiate products in the marketplace so that consumers know what they're getting and also so that producers have some incentive to invest in their products in order to make their products better or just different from those of other because they have a way of signifying that their products are theirs. The touchstone of protection under Trademark Law is consumer confusion. Are two different suppliers of goods or services using a mark that is sufficiently similar to one enough that one of them can be considered to have infringed the trademark of the other? That's the touchstone of protection there. Trademark law is a hybrid institutionally in its structure between the model I described for patent law and the model for copyright law. In trademark law you get protection without any administrative process right off the bat, as soon as you start using a mark in commerce that is sufficiently distinctive. If it's a made up word and you start using it, you have trademark protection from day one, at least in the market that you're using it. If it's a descriptive word, we ask for a little bit more, a descriptive term or descriptive phrase, we want to see the consumers have come to recognize it as a brand, but once that's the case, once it really operates as a trademark then your protection springs into being just like that. But, your protection is limited in a number of different ways when you just have what we call the raw common law protection that just comes from using the mark. You can strengthen your trademark rights significantly by going to the US Patent and Trademark Office and registering your mark. One of the most significant forms of protection that you get then is nationwide protection of your mark, not just in the geographic area where you're operating. That's an example of the strengthen protection that you get when the Patent and Trademark Office looks at your application for trademark protection and determines that you are entitled to it. Once they issue that protection, like in patent law, now you get strengthened rights that you wouldn't have had under the common law system. That's a basic overview of how rights under the patent, copyright and trademark systems are allocated and the different institutional structures and blends that are available. That helps I think to illustrate the different considerations that come into play in structuring intellectual property systems to deal with different kinds of intangible assets protected by IP rights. PUBLIUS: Going back to our earlier discussion about whether IP is property - do any of these categories (patent, trademark, copyright) more or less closely resemble physical property? JAMES STERN: A major difference that is often sighted between IP and traditional physical property is what's referred to as the non-rivalrousness of ideas and information. Now, right off the bat I want to say that the difference where it comes up tends to have a lot more to do with some areas of IP law than with others. It has more to do with copyright and patent, for example, than it does with Trademark Law. But, let me describe what that difference is. In a nutshell, the thinking is that with physical property two people can use the resource at the same time. What Property Law is doing in the first place, it's a stop light traffic cop sort of function, when it's the case that two different people can't use the same resource, we need some rules just to govern well, if you've got two rival claimants, which of them is going to get it? On top of that, you might want to not only have some resolution of the problem, but you might want to have the best available solution of the problem. You might wan to have a solution that tends to ensure that resources, one way or another, reach their highest value in users, say, or the most deserving party or however you want to structure your rules. With IP, that doesn't come up. While it's not the case that two people can eat the same apple, two different people can sing the same song or use the same pharmaceutical medication. This is thought to be a critical difference at least those kinds of IP and traditional property. Now, that's not as true for trademarks. Trademarks really just don't work as well when everybody is using them. It's just like a name, it's true that we can all have the same name, we could all be named Bob, but if we were all named Bob it wouldn't do much good having names, would it? So there's go to be a level of differentiation there so that claim about non-rivalrousness is less pertinent when it comes to trademarks. When it comes to patents and copyrights, we say the underlying good, the ideas and information protected by copyright or by patent law are non-rivalrous in their consumption and there are different ways of modeling this. There's some more sophisticated economic versions of this, but that's the basic story. For that reason, intellectual property protection has to rest on a different justification than traditional property. That's the idea. The justification is, an incentive view. That carries over from traditional property, but what doesn't is the need to mediate between conflicting claims. The reason we award patents and copyrights is only because we need to subsidize investment in the production of them in the first place. Once they are created, once we've basically provided a subsidy to the creator in the form of these exclusive rights that will compensate or motivate the creators to create their inventions or their creative works protected by copyright, once that's done IP really has nothing more to say about things. So, it isn't needed to perform this basic traffic cop function that you have with traditional physical property. I have suggested that this story is exaggerated or incomplete at best. For while it is the case that two different people can often use the same ideas and information at the same time, it doesn't follow that there aren't conflicts about it. There are lots and lots of different examples of ways in which two different people have conflicts about ideas and information, not because they both want to use it at the same time, but because one person wants to use an idea or piece of information in a particular way and another person wants that first person not to do so. All of privacy law more or less has this structure. It's not so much that I want to read my old emails for six years ago, as much is that I want other people not to. That's a resource conflict. There are lots of examples of artists who don't want their work used in particular ways. For example, to support political candidates who may oppose, but other ways as well. They don't want their works performed in particular places or they don't want them redone in particular forms. Lots of examples of that. So, it really isn't the case when you get down to it that there's no potential for resource conflicts when it comes to ideas and information including the kinds of material that protected by copyright` and patent law. That's the essence of the claim that I lay out. In a lot of ways patent and copyright law aren't that well structured to deal with those kinds of conflicts. That can make us hard to see that there are those conflicts. We tend to say, for example, look copyright law is not about privacy, privacy law is about privacy. That reflects a choice that's been made, it certainly doesn't have to be the case and there are lots of examples of people who've used copyright law to protect privacy interest, for example, of people who've asserted in the context of say, revenge porn, have asserted copyright protections to prevent the dissemination of videos. The real question, there's a lot more going on and a whole lot of assumptions that are built into the conventional discourse about intellectual property law and the non-rivalry, the standard non-rivalry story that's in circulation is a neat story, it's very clean and it can make sense of a lot of things about IP law, but it's also much more debatable than it's made out to be and to the extent it's used as a way of suggesting that IP is just totally different from conventional property law. The answer is, well the differences are not so great as that there are more similarities than the conventional account of these things tends to appreciate. NARRATOR: Thank you for listening to this episode of the No. 86 Lecture series on Property Law. The spirit of debate of our Founding Fathers animates all of the No. 86 content, encouraging discussion and critical reflection relative to how each subject is widely understood and taught in law schools and among law students. Subscribe to the No. 86 Lecture series on your favorite podcast platform to have each episode delivered the moment it’s released. You can also go to fedsoc.org/no86 for lectures and videos on Federalism, Separation of Powers, the Judiciary and more. Thanks for listening. See you in class!