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Wednesday, December 07, 2005

Takings in Land (and non-land)

After reading City of Oakland v. Oakland Raiders, 32 Cal. 3d 60 (1982) for property tomorrow, I confess that I am impelled to blog about what I have been wondering for so long. How do the eminent domain rules which seem perfectly workable (if sometimes unjust) when applied to property in land work when they are moved to chattels and to ideas?
First off, there are a serious of problems of jurisdiction. In City of Oakland, the government of Oakland attempted to use eminent domain to compulsorily acquire the Oakland Raiders. If it had succeeded (which it did not), why limit themselves to the Raiders? Presumably when the Dallas Cowboys or the Buffalo Bills come to play in Oakland, they will be subject to the jurisdiction of the city, so if the city could use eminent domain to acquire their own team, couldn't they acquire the visitors too? Wouldn't the same analysis apply to all sorts of national corporations? Does the fact that Microsoft does business in Oakland imply that the city has the power (if it could only muster the cash) to compulsorily acquire a majority share in the firm for fair market value? Or is there some deeper but unspoken nexus requirement before eminent domain can be exercised?

What about intellectual property? Does the gift of a federal patent automatically preclude all state interference with it, or could Nevada compulsorily acquire pharmaceutical patents and use them to manufacture low-cost drugs without infringement? For that matter, how do different states use eminent domain against each other? Could Nevada use eminent domain every time a California police officer drives into the state to compulsorily acquire their patrol car? Could California simply acquire them back? And so on?
And for all of these things, where is the relevant Fair Market Value assessed? In the state where the property comes from, or the state where the property goes? And so on.
I did not intend for this post to be quite such a casebook-style blitz of questions, but I confess that I simply don't understand how the principles of eminent domain are supposed to work once we leave the fabled lands of real estate.

Posted by Will Baude on December 7, 2005 at 02:43 PM in Property | Permalink

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A certain "conspiratorial" legal scholar has suggested that the remedy for state infringement of intellectual property rights would be just compensation, following a "reverse condemnation theory." This doesn't directly answer any of your questions, but he notes that this approach bears some resemblance to an exercise of eminent domain.

Posted by: Jed Adam Gross | Dec 7, 2005 5:16:08 PM

We were just discussing this the other day, but finals have put a crimp on thinking about anything other than finals.

If interfering with a universal property right is a taking (right to exclude, right to transfer, etc), then why would IP not work the same way? IP rights are arguably artificial, but no more so than real estate rights. So then we get to the Kelo-type discussion about what is "public good" and what is just compensation. It seems certain that IP taking will become a much bigger issue in the future.

The problem of just compensation isn't limited to government appropriation of IP, it's also part of determining infringement, according to some courts. The real problem with IP is that unlike real estate, we still don't have a very well defined sense of what IP actually is, let alone decent standards for measuring value -- do we protect market share? Do we protect markets that the owner doesn't even participate in? What are we protecting?

It's tough to answer these questions in regard to takings when we have such trouble answering them in regard to the very nature of intellectual property itself (and note that the principles of takings are still confused even when relating to real property). There's a need for a lot more scholarship here.

Posted by: D Conrad | Dec 7, 2005 8:24:07 PM

By coincidence, I had a conversation with Richard Epstein about MercExchange today, and it led me to make a post on Kelo and IP at Point of Law before I saw your post.

Posted by: Ted | Dec 7, 2005 10:07:54 PM

Ted: Why isn't the answer to the MercExchange-Kelo question that for purposes of the grant of a federal patent right, the federal takings clause naturally incorporates certain background rules and obligations on that right?

So if the government were the one that gave Kelo the house, they could surely demand that she sign an anti-troll covenant too, couldn't they? Or even that she just sign a covenant conceding their right to pass anti-troll legislation in the future? Now if the government had a monopoly on houses in New London, this would be troubling, but not necessarily unconstitutional.

In normal real property cases, of course, the land doesn't come via direct federal grant except through the legal fiction that once upon a time everything was owned by Lord Fairfax, but when the federal government decides to create an optional system of IP grants, why can't it attach conditions like this one? Or, more to the point, why should its ability to attach conditions like this one have much to do with the government's ability to take real property that Kelo bought from somebody else?

Posted by: Will Baude | Dec 7, 2005 11:53:53 PM

Speaking of background norms, it seems widely accepted that one aim of patent law (aside from encouraging innovation) is to induce inventors to transfer ideas, which might otherwise be guarded as trade secrets, into the public domain. Thus, in a limited sense, ordinary patent law is "anti-troll legislation." In contrast, although having clear title facilitates the profitable alienation of real property, the notion that real property rights are (or should be) carefully calculated or calibrated to maximize economic efficiency would seem far more controversial, especially post-Kelo.

Posted by: Jed Adam Gross | Dec 8, 2005 2:00:16 AM

The federal government can certainly attach conditions to the grant of intellectual property. But Congress is debating patent reform right now, and explicitly rejected including a ban on the automatic injunction. It's not the Supreme Court's place to reweigh that assessment and implement a policy Congress rejected.

Posted by: Ted | Dec 8, 2005 10:53:45 AM

Okay. So the question is just a standard question about whether interpreting statutes badly is undemocratic and bad? (It is.)

Posted by: Will Baude | Dec 8, 2005 10:58:20 AM

By the way, it says something about Yale Law that property isn't taught the 1L year. Is it even mandatory?

Posted by: Ted | Dec 8, 2005 2:36:32 PM

Property? Required at Yale? Surely you jest.

First semster we're required to take contracts, torts, con law and procedure (which is mostly but not entirely civil procedure).

Sometime in the next 2.5 years we must take professional responsibility (Amar's Crim Pro class counted for that), write 2 papers, and take criminal law.

That's it.

Posted by: Will Baude | Dec 8, 2005 2:42:54 PM

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