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June 17, 2011

When Are Physical Property And Intellectual Property More Alike?

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Posted by Alan Wexelblat

This will take a bit to set up, so bear with me. Some people, not least of them Richard Stallman, think that the term "intellectual property" is itself nonsense - treating ephemeral items such as patents and software the same way one treats physical objects like cars and plots of land is wrongheaded. I've tried to get Stallman to give me a clear answer on what he thinks they should be treated as, but gotten no coherent response. So let's assume for the purposes of this discussion that property means "property" and we can treat them the same. (Image taken from the cover of Richard Posner's book on legal theory.)

That's important in this case because there are laws, generally classified under the realm of eminent domain, that control how and when a governmental entity can take what is nominally private property. If we're treating intellectual property in this way then you can, in theory, apply eminent domain principles to a state actor taking intellectual property.

To my knowledge, this is a novel theory. Or it was until last month when NeuroGrafix, a medical imaging company, sued the regents of the University of California for infringing NeuroGrafix's patents, on the theory that their infringing activity constitutes an illegal taking under the rules of eminent domain. NeuroGrafix will argue that a taking of this sort requires both due process and potentially just compensation, as guaranteed by the 5th Amendment.

Why go through all this indirection and not just sue UC for ordinary infringement? Well, the short answer is "you can't"(*). States enjoy what is called sovereign immunity - you more or less can't sue them for damages without their consent. There was a case in 1999 called Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank that dealt directly with the issue of patent infringement claims. Since UC is an arm of the state it enjoys that immunity umbrella.

Like all novel legal theories, this one will likely need to be put to the test more than once before any law is considered decided. For example, I'm not clear on what NeuroGrafix will argue is the "taking" in this case, or how they'll try to value the property lost, for which they'll claim compensation.

That's part of the danger of making this analogy between physical and intellectual. We've all seen ridiculously inflated damages claims in IP cases before. H/T to PATNEWS for the pointer; this case doesn't seem to have gotten much mainstream media attention.

(*) the whole notion of sovereign immunity is still much in debate. The Wikipedia entry for the 11th Amendment, which established this immunity, notes that as recently as 1999 the Court split 5-4 on an immunity question.

Comments (3) + TrackBacks (0) | Category:


1. PJ on June 20, 2011 3:52 PM writes...

Aw, I was hoping you were going to elaborate on the contradictions in the "I don't sell you a copy, I just license you the IP" theory of CD/DVD sales:

1) if it's a true sale, I can do with it as I will, show it to whom I want, etc - I own it.

2) if it's a license, then why do I have to pay for the license again when the media wears out or is damaged?

I've yet to see a really good response to this other than IP owners who want to have their cake and eat it too.

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2. DrWex on June 22, 2011 10:23 AM writes...

The licenses on CDs and DVDs are baroque nonsense for the most part. Trying to parse that will most likely give you a migraine.

The theory, as I understand it, is that what you're buying is a physical object (the platter) along with certain rights to the content encoded on it. You can certainly do what you want with the physical platter, but you're restricted from doing certain things with the content (e.g. arranging a public paid showing).

As to why you have to buy it again (and again and again) - because they can make you. The new cloud-based services are the first major threat to disrupt this model that I know of. It may be possible that - with these services - you'll be able to own your content across changes in media format and player fashion. But with other restrictions, of course.

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3. PJ on June 29, 2011 4:05 PM writes...

>The theory, as I understand it, is that what you're buying is a physical object (the platter) along with certain rights to the content encoded on it.
>The licenses on CDs and DVDs are baroque nonsense for the most part. Trying to parse that will most likely give you a migraine.

...but that's where those "certain rights" are listed. Yeah, ow, my head.

And don't misunderstand - I understand their theory, I just dislike their ability to have their cake and eat it too: all the restrictions of a license plus the fragility of a tangible.

And maybe they shouldn't be able to make me? If I can prove to them that I already have a license to that content, they should be required to sell me another copy at production cost (plus profit, even). If they claim that production cost plus profit is equal to retail then clearly the licenses are free... nah, nevermind, logic doesn't apply here.

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