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COPYRIGHT 2008 Harvard Society for Law and Public Policy, Inc.
The right to exclude has long been considered a central component of property. In focusing on the element of exclusion, courts and scholars have paid little attention to what an owner's right to exclude means and the forms in which this right might manifest itself in actual property practice. For some time now, the right to exclude has come to be understood as nothing but an entitlement to injunctive relief--that whenever an owner successfully establishes title and an interference with the same, an injunction will automatically follow. Such a view attributes to the right a distinctively consequentialist meaning, which calls into question the salience of property outside of its enforcement context. Yet, in its recent decision in eBay Inc. v. MercExchange, L.L.C., the Supreme Court rejected this consequentialist interpretation, declaring unequivocally that the right to exclude did not mean a right to an injunction. This Article argues that eBay's negative declaration sheds light on what the right has really meant all along--the correlative of a duty imposed on non-owners (the world at large) to keep away from an ownable resource. This duty (of exclusion) in turn derives from the norm of inviolability, a defining feature of social existence, and accounts for the primacy of the right to exclude in property discourses. This understanding is at once both non-consequentialist and of deep functional relevance to the institution of property.
INTRODUCTION I. CONCEPTUALIZING THE RIGHT TO EXCLUDE: A TAXONOMY A. Three Models of Analysis 1. The Right-Privilege Distinction 2. The Two-Tiered Structure of Rights (and Duties) 3. The Entitlement Framework B. Possible Formulations of the Right to Exclude 1. The Claim-Right to Exclude 2. The Privilege-Right to Exclude 3. Remedial Rights to Exclude a. The Vindicatory Right b. The Right to Exclusionary Relief C. Unitary, Bundled, or Disaggregative? II. THE CORRELATIVE RIGHT TO EXCLUDE: GROUNDING PROPERTY IN SOCIAL MORALITY A. The Right to Exclude as a Moral Norm 1. The Principle of Inviolability 2. Inviolability in Practice 3. Inviolability Manifested Through the Right to Exclude 4. Simulations and Extensions: Intangibles B. The Analogy to Contract's Performance Right 1. The Contractual Right of Performance as a Moral Right 2. Enforcing the Promise: The Specific Performance Riddle C. Toward a Pragmatic Conceptualism of Property III. THE REMEDIAL VARIANT: EXCLUSIONARY RELIEF AS A RIGHT A. The Traditional Test and the Right to an Injunction 1. Real Property: Injunctions Restraining Acts of Trespass 2. Injunctions Restraining Patent Infringement B. Unlinking Right and Remedy: Understanding eBay 1. The Automatic Injunction Rule 2. The Supreme Court and the Automatic Injunction 3. The End of Automatic Injunctions: Intellectual Property and Beyond 4. Moving to Efficient Infringement (and Trespass?) CONCLUSION
"The notion of property ... consists in the right to exclude others from interference with the more or less free doing with it as one wills."
--Justice Holmes in White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 19 (1908) (concurring).
"The power to exclude has traditionally been considered one of the most treasured strands in an owner's bundle of property rights."
--Justice Marshall in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982).
"[T]he creation of a right [to exclude] is distinct from the provision of remedies for violations of that right."
--Justice Thomas in eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1840 (2006).
INTRODUCTION
What does it mean to speak of property in terms of the "right to exclude"? As a direct consequence of equity's avowed preference for property (over personal) rights in the grant of exclusionary relief, courts and scholars have developed a view that identifies property's right to exclude as meaning little more than an entitlement to injunctive relief against a continuing (or repeated) interference with a resource. This view attributes to the right an entirely consequentialist meaning, under which the right--and indeed all of property--is normatively meaningless except when sought to be enforced in a court of law. If property, as a fundamental social institution, is important outside its remedial context, it is important to identify what the right to exclude means apart from the availability of an injunction. This Article attempts to do this by locating its meaning in the norm of inviolability and the obligation it casts on non-owners to stay away from resources that are owned (and capable of being owned) by someone else.
In his now-legendary formulation, Blackstone defined property as "that sole and despotic dominion ... exercise[d] over the external things ... in total exclusion of the right of any other." (1) Blackstone's definition has since been morphed into a more general definition of property rights in the abstract, centered around the in rem right to exclude. (2) On numerous occasions, in dealing with the issue of takings, the Supreme Court too has characterized the element of exclusion as a critical component of the property ideal. (3)
The idea of exclusion, in one form or the other, tends to inform almost any understanding of property, whether private, public, or community. (4) The only variation tends to be the person or group in whom it is vested. Private property entails vesting it in an individual; public property, in a government or other agency on behalf of a wider set of individuals; and community property, in members of a community against nonmembers. Consequently, the tendency among scholars, courts, and legislators to equate conceptions of property with the notion of exclusion remains pervasive?
Within the exclusionary conception of property, the right-based variant tends to dominate overwhelmingly. A decade ago, Thomas Merrill argued that the "right to exclude" remains the sine qua non of property. (6) The Supreme Court, whenever it invokes the idea, also speaks in terms of a "right" to exclude. (7) Although scholarship and judicial dicta over the years have attempted to understand and apply the exclusionary component of the right to exclude, the debate has tended to ignore altogether the right component. (8) Why is speaking of property in terms of a right to exclude unsurprisingly common? Does the identification of exclusion as a right shed light on its practical significance (as a remedy), or is it merely a rhetorical epithet emphasizing its centrality to the discourse (analogous to the right to life)?
Focusing on the right component of the "right to exclude" is of more than just theoretical value. This focus carries with it a deep functional relevance, one that derives from the interplay between the language of rights and remedies. (9) For quite some time, the right to exclude in the context of both tangible and intangible property has come to be associated with an entitlement to exclusionary (injunctive) relief. Thus, interferences with an owner's interests are thought to entitle the owner to a permanent injunction restraining such interferences. The right to exclude, according to this understanding, is a remedial attribute related to the automatic availability of injunctive relief for interferences with an owner's use and enjoyment of her property.
In eBay Inc. v. MercExchange, L.L.C., (10) however, the Supreme Court effectively unlinked the right to exclude from any entitlement to exclusionary relief. (11) In eBay, the Court concluded that an affirmative finding of validity and infringement did not automatically entitle a patentee to an injunction against the infringer, and held that the traditional four-factor test used by courts of equity determined the availability of an injunction. (12) Put differently (in property terms), the Court concluded that an interference with a property interest, even a continuing interest, does not automatically entitle the owner to an injunction. The owner must still affirmatively establish the inadequacy of ordinary compensatory remedies. The point was driven home most forcefully by Justice Kennedy, who observed in his concurrence that an owner's "right to exclude does not dictate the remedy for a violation of that right." (13)
Almost all analyses of eBay thus far have focused on its impact on patent law (or intellectual property), and have tended to ignore the relevance of the Court's holding for property law more generally. (14) Although the Court's holding was directed specifically at patent injunctions, the express basis of its holding remained the need to subject patent injunctions to the standard governing "other cases" where injunctions were granted. (15) By finding the four-factor test to be the correct standard, the Court implicitly acknowledged its universal applicability to all grants of injunctive relief. Viewed in this light, the eBay decision concluded that a grant of injunctive relief, regardless of context, could never be automatic or ensue as a matter of right.
The eBay decision thus calls into question, rather starkly, the meaning and relevance of the right to exclude, both within the domain of intellectual property and in the wider subjects of real and personal property, at least insofar as each remains premised on the idea of exclusion. If property is no longer automatically associated with exclusionary relief, is it meaningless to continue characterizing the right to exclude as its central attribute? Taking the functional interpretation of the right to exclude as a given, some have readily concluded that the eBay decision heralds the declassification of intellectual property (specifically, patents) as a species of property strictu sensu, or that it dilutes the significance of the right to exclude in understanding intellectual property, and thus all property. (16)
My argument in this Article is very different: I argue that the eBay Court's unlinking of right and remedy in relation to exclusion counterintuitively helps to shed light on what the right to exclude means in the context of intellectual property and property more generally, and to illuminate the role it plays in structuring different elements of the governing legal regime. The right to exclude, I argue, is best understood as a normative device, which derives from the norm of resource inviolability. Analogous to the role of promising in contract law, the right to exclude operates as an analytic tool, which seeks to transplant the norm of inviolability from morality to law (admitting of exceptions as circumstances demand).
Part I sets out different interpretations of the right to exclude, and uses three different theoretical frameworks. Part II then argues that if property is understood as an institution of significance independent of its actual enforcement, the right to exclude must be understood as a correlative right deriving from the norm of inviolability. Part II proceeds to show that the right to exclude can indeed have independent normative traction regardless of whether it is actually enforced, much like the performance right in contract law. Understanding the right along these lines is not only practical; it also explains its lingering persistence in property discourse. Part III focuses on the interpretation at issue in the eBay case: the exclusionary remedy variant. Part III.A examines the mechanical availability of injunctions in the context of tangible and intellectual property and the interface between equity courts' discretion and the status of the right. Part III.B then focuses on the impact of eBay on this interpretation of the right, and attempts to show that the eBay decision may be seen as foreshadowing the move towards a theory of efficient infringement or efficient trespass.
The objective of this Article is not to argue that the right to exclude is all that there is in property. (17) Although the idea of property most certainly consists of more than just exclusion, to be meaningful it must contain, at a minimum, some element of exclusion. How such exclusion might manifest itself in property theory and practice, then, serves as the focus of the Article.
Accepting or rejecting the centrality, for property, of the right to exclude is conditioned upon a basic understanding of what the right means and entails. This Article is an attempt to further that very understanding.
I. CONCEPTUALIZING THE RIGHT TO EXCLUDE: A TAXONOMY
Comprehensive philosophical theories on the nature and function of legal rights have existed for several centuries now. (18) Yet, one finds little to no analysis of the right to exclude in their exegesis. (19) At the same time, property scholars have tended to focus almost entirely on the exclusion element, even though they continue to use the language of rights theorists. (20) Few have sought to pay close attention to both elements, with the result that the precise meaning of the phrase, in spite of its persistent usage, remains largely obscure. (21) Although some property theorists speak of the right as a unitary concept, others use it to represent a collective set of rights. (22) Ironically, virtually all property theorists consistently underplay their reasons for characterizing the situation as giving rise to a right when it is precisely the study of these reasons that remains the focus of rights theorists. It is therefore rather surprising that proponents of the right to exclude tend to neglect altogether the unique interface of their ideas with those of the rights discourse more generally.
This Part attempts to describe that interface by classifying possible conceptions of the right to exclude based on their structural and functional attributes. While a classificatory exercise of this nature may seem irrelevant and largely academic, given that the common law is structured as a set of events and responses to them, differentiating one event (for example, infraction of a specific right) from another invariably dictates the law's response to it. Characterizing something as a right--absolute or conditional--brings with it certain well-defined legal consequences. (23) Therefore, understanding the basis of such a characterization helps to shed light on the kind of consequences that do and ought to follow.
A. Three Models of Analysis
This section sets out three independent conceptual devices that courts and scholars regularly employ in their analyses of rights and connected elements (duties, remedies, and so on).
1. The Right-Privilege Distinction
Perhaps the most important conceptual distinction in analyzing the right to exclude is the right-privilege (also known as the right-liberty) distinction. Although positivist scholars employed the distinction early on, Wesley Hohfeld is credited with laying out the distinction in its most lucid and concrete terms. Writing near the turn of the twentieth century, Hohfeld developed a comprehensive scheme for classifying legal concepts in the common law, which he called "jural relations." (24) Relations were thus classified into rights, duties, privileges, no-rights, powers, immunities, liabilities, and disabilities using two independent matrices. (25) In addition, legal relations were identified as in personam (or "paucital") when they involved discrete parties, such as contractual one-to-one connections, (26) or as in rem ("multital") when they involved a relation between an individual and multiple, indeterminate individuals. (27) Hohfeld characterized property relations as multital, because they involved the owner interacting with an indeterminate set of individuals (potential trespassers). (28)
In Hohfeld's analysis, a right (or a claim) is defined as a situation that places another individual (or group of individuals) under some sort of correlative duty. (29) The content of the right is defined entirely by the content of the correlative duty (or obligation) that it imposes on another. Hohfeld contrasts his idea of a right with that of a privilege, which has independent normative content in that it privileges, or allows its holder to do certain things, quite independent of others. (30) Its correlative is thus a "no-right," a position that represents the absence of a right in anyone else to stop the holder's privileged (or allowed) action. Hohfeld makes the distinction most obvious with the illustration of landowner X, noting that "X has a right against Y that he shall stay off the former's land" and, equivalently, "Y is under a duty toward X to stay off the place." (31) He further observes in the context of the right-privilege distinction that "whereas X has a right or claim that Y, the other man, should stay off the land, he himself has the privilege of entering on the land." (32) Later, specifically in the context of property, Hohfeld makes the distinction even clearer with the example of a hypothetical landowner. (33)
Whereas a right is brought into question only upon a breach of its correlative duty, a privilege offers its holder the opportunity to perform a positive act unfettered by another's claims or actions. (34) The right-privilege distinction is, then, little more than a positive-negative distinction. Yet the distinction is of more than just philosophical relevance. Although it is clear when the law protects a right--when it imposes a duty on another--it is not readily apparent when the law protects a privilege. If a privilege is understood as the absence of rights in others to restrict the privileged action, the negative definition does little to clarify the circumstances under which an action may be considered privileged. Consequently, scholars have been quick to point out that a privilege is not strictly legal in the same sense as rights (and duties), and therefore sits rather uneasily in Hohfeld's framework given that it remains devoid of content absent specific circumstances. (35)
Although a right and a privilege in this understanding no doubt remain distinct, it is important to note that in a vast majority of situations a privilege comes to be protected by a right. In other words, a privilege becomes capable of being exercised because of the existence of an overarching right that shadows it and requires others to abstain from interfering with the privileged area of action. (36) This is often referred to as the "shielding" thesis. (37) This thesis helps explain why rights and privileges are often conflated and why in a vast majority of situations privileges continue to derive at least indirect protection from the law. Privileges thus represent situations where the law protects behavior by its active non-interference (or acquiescence)--it both does not interfere on its own and additionally denies others a right to interfere. Even though rights are usually accompanied by privileges, situations do exist where privileges remain unprotected by rights, (38) and it is here that the distinction begins to assume practical significance.
2. The Two-Tiered Structure of Rights (and Duties)
The second analytic device of relevance for the purpose of this Article is the two-tiered nature of rights, often referred to as the distinction between primary and secondary rights (and duties). Alternatively characterized as the substantive-procedural or right-remedy distinction, the idea postulates the existence of a primary right that is brought into existence either volitionally (that is, contractually) or through the operation of law (tort law, for example). Upon an infraction of the right, the legal structure then provides for a secondary right to operationalize the primary one or remedy its breach. (39) Contract law is taken as paradigmatic of this structure, where the contract gives rise to a set of rights and duties between the contracting parties. (40) Upon breach of the contract's terms, the law then provides the nonbreaching party with the option of bringing an action for the breach, coupled with remedies for the same. Scholars have tended to disagree on their characterization of the secondary right; some call it a right, others a remedy, and yet others a remedial right. (41) All of them, however, refer to the idea that an interference with a primary relationship gives rise to a secondary one.
While contract law remains the paradigm of the tiered structure, problems begin to emerge when one enters the domain of tort law, for liability in this area is premised on a primary duty of care, the existence of which the law determines ex post, upon an alleged interference with it. (42) The primary relationship is thus determined at the stage of the secondary one. This artificial construction has resulted in some debate over whether tort law does embody the two-tiered structure. (43) The general view is that indeed it does, even though the determination often happens after the conduct, because, in a majority of situations, the basic contours of the duty remain known ex ante. When driving a car, for example, the driver knows not to drive carelessly.
The exact origins of the tiered structure remain somewhat unclear. Although both Blackstone and Austin employed the primary-secondary framework routinely, (44) some trace it to the French philosopher Robert Pothier, who employed it in the context of his exposition of contract law. (45) Hohfeld too emphasized the distinction in his classification. (46)
A primary right thus represents a situation where an individual is vested with a right, independent of any preceding relationship. (47) A secondary right, on the other hand, is always contingent on the existence of a primary relationship involving the party asserting the secondary right, and is therefore conditional. (48)
3. The Entitlement Framework
In 1972, Guido Calabresi and Douglas Melamed propounded an independent theory of entitlements--a unified theory of property and tort--that focused entirely on mechanisms of protection. (49) Whereas Hohfeld had sought to lay out individual jural relations as they existed prior to any court pronouncement, Calabresi and Melamed focused on rules adopted by courts in "protect[ing]" the entitlement. (50)
The entitlement model involves two steps: in the first, the legal system vests the entitlement in someone; in the second, it adopts one of three rules to protect the entitlement so vested. (51) Calabresi and Melamed focus almost entirely on the second of these steps--"second order decisions"--and classify forms of protection as property rules (when the law protects against involuntary transfers), liability rules (when the law allows involuntary transfers), and inalienability (when the law disallows all transfers). (52) Calabresi and Melamed then argue that a host of considerations--including economic efficiency, distributional goals, and morality--guide judges' and lawmakers' choice of rules. (53) Almost all the literature on the Calabresi-Melamed model has come to view it as focusing almost entirely on the issue of remedies, whether legal, equitable, or otherwise. (54) According to this literature, a property rule is commonly associated with ex ante injunctive relief, whereas liability protection is associated with an award of damages ex post.
The Hohfeldian model and the entitlement framework exhibit an interesting reflexive symmetry. (55) Hohfeld focuses entirely on the bare structure of conceptions (or entitlements), and disregards their actual enforcement or vindication. Calabresi and Melamed, on the other hand, focus entirely on remedies and disregard the structure and content of individual entitlements. (56) Whereas Hohfeld cautions against the use of remedies to understand a jural relation, Calabresi and Melamed exclusively use remedies to understand the functional relevance of an entitlement. (57)
In its focus on the actual mechanisms of protection (that is, enforcement), the entitlement framework neglects situations where jural relations (or entitlements) come to be protected not necessarily by operation of law, but rather with the acquiescence and approval of law. The distinction between a right and a privilege represents just such a situation. The effective exercise of a privilege, unlike a right, requires absolutely no re course to enforcement mechanisms. Privileges of this sort find no place in the entitlement framework, for they do not invoke any legal mechanism and therefore are not protected as such. (58)
The entitlement framework has had the effect of moving the discussion of rights away from its conceptualist traditions. Whereas the discussion of rights and duties had hitherto focused on issues such as the manner in which they vested and the parties between whom they operated, the entitlement framework now requires analyses to focus on rights and duties primarily through the consequences of their breach. This framework thus focuses on understanding the right through the lens of the remedy. For example, it matters little whether an entitlement has the structural attributes characteristically associated with ownership for it to be categorized as a property right. (59) All that is needed is that the law protect the entitlement with a property rule upon an infraction. In this framework, the right is meaningful only when protected by a specific kind of remedy. The entitlement framework thus effectively moves the emphasis in rights-analysis towards remedies. (60)
This near-exclusive focus on remedialism attributes to the law a principally corrective (or restorative) function. Legal rules become relevant only when they attach consequences to individuals' actions--as forms of enforcement--but never as independent sources of values and principles that could guide their behavior ex ante. (61) The enforcement framework thus assumes that the law comes into play only during acts of recalcitrance (for example, breaches of contract or violations of the duty of care), but never influences behavior independent of its enforcement function. (62) It thereby ignores the fact that legal rules do elicit compliance and cooperation, most often out of a belief in the legitimacy and fairness of legal authority and not merely in contemplation of remedial consequences, such as sanctions. (63) Legal rules can be meaningful well before their breach is contemplated.
B. Possible Formulations of the Right to Exclude
Applying these three analytic devices to the right to exclude provides us with four possible conceptions of the right. The first two remain distinctly non-remedial and involve the claim-right and the privilege-liberty. The remaining two adopt a remedial approach to the right and build on the entitlement framework. The four versions together are: (1) the claim-right to exclude; (2) the privilege-right to exclude; (3) the right to vindicate one's ownership through enforcement; and (4) the right to an exclusionary remedy. Each is described in more detail below.
1. The Claim-Right to Exclude
One of the characteristic features of claim-rights is that these rights are always correlative. Consequently, they can never be understood independent of the jural relationship of which they form a part and the correlative duty that they impose on others. Corbin provides an apt definition of a claim-right as "a relation existing between two persons when society commands that the second of these two shall conduct himself in a certain way (to act or to forbear) for the benefit of the first." (64) The claim-right, then, is to be understood entirely from the nature of the correlative duty that it imposes on others. (65) Although the term "correlative" carries with it the connotation of a bond of sorts between the two elements, in reality it signifies little...
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