Week Eight: Property

Administrative items

Week 8 Case MGM Studios Inc. et al. v. Grokster, Ltd. et al.

Chapter 47: Personal Property

"Property": what does it mean to "own" something?

Can you own something 10,000 km away that you've never seen? Can you own something that cannot be perceived by the senses?

"Property": a bundle/group of private rights to control objects and abstractions, enforceable in law.

Rights to use, to decide who else may use, to exclude others from use, to misuse, and to transfer such rights to others. We speak of things as "property", but property is really about relations with other people

For some people to have such rights, they must be denied to others, so there are those who assert that


- P. J. Proudhon, 1840

The bundle of rights can be broken apart or fragmented in various ways. Property rights can be structured in time, in extent, can overlap or be contingent.

The Paradoxes of Property

Rights inevitably conflict: for example, the value of my land is affected by how my neighbors use theirs. There can be tort liability for uses that are "nuisances", and there are building and zoning codes to regulate construction and limit possible uses. However, the concept of "property" gives little guidance as to where the limits should be placed -- the existing pattern of rights reflects the accidents of history and the outcome of political struggles rather than the operation of impartial laws.

Law & Economics: The Coase Theorem says that the initial definition of rights wouldn't matter in a world with perfect information and no transaction costs. However, we do not live in a frictionless universe -- indeed, we could not even stand upright were it not for friction.

Debtor relief, such as thru reorganizing bankruptcy, overrides the property rights of particular creditors in order to further the interests of creditors as a group, and also the interests of debtors and creditors generally

See Roberto Unger, The Complex Structure of Legal Consciousness, pp. 41-46

Classifications of property

Real estate: land and things attached to land, like buildings

"Fixtures" depend on degree of attachment Eg: computers once were fixtures

Personalty: movables

  • "Tangible": things that can be touched.
  • Intangibles are abstract, such as stock or copyrights

Acquiring ownership of personalty

Some items are controlled by documents of title (e.g. auto pink slip in CA)

Lost, mislaid and abandoned personalty

Distinction: "Lost" is due to carelessness, "Mislaid" is due to forgetfulness after voluntary placing in particular location, and "Abandoned" is intentionally discarded

Distinction affects rights of the finder vs those of owner of place where found

  • Lost: Finder obtains "title" (all rights of ownership) against all but true owner
  • Mislaid: Owner of place where found obtains right to possess (not all rights, just right to hold) vis-a-vis all but true owner
  • Abandoned: (eg. old furniture dumped on sidewalk.) Whoever takes, owns
  • Estray statutes: a finders-keepers law with reporting, holding, and public notice

Abandoned financial assets: Escheats


One of oldest legal concepts: Ca 1100 A.D. or so. Way before contracts: society of farmers: land and cattle

A "Bailee" is a temporary holder of personal property owned by another

Bailment separates the right of present possession out of the ownership "bundle". It may be for safekeeping, storage or delivery, or for hire or as a favor

Bailee's standard of care

"Please hold this for me" vs "May I please borrow it" vs "Storage $5 per day." What about "Park and lock. Not responsible"?

Chapter 48: Real Property

"From now to eternity" (and answerable only to the King) - most common type by far

Fee simple defeasable

all rights, but can be lost if something happens or fails to happen in the future

Life and term estates

Right to income for life (or term of years) but no longer. Duty not to commit "waste" -- not impair the value for the next owner

Reversions and remainders

These are "future interests" after estate for life or term of years

Overlapping rights: Concurrent ownership

The 2x2 co-ownership matrix: Do they own as a married couple, or not? Does the survivor own everything, or not?

Joint tenancy w/ right of survivorship

How created and purpose for creating. Note potential problems w/ survivorship: the tontine. How JTROS can be terminated

Tenants in common

Tenancy by the entirety

only for married couples/not in California

Community property: California system

Condominiums and cooperatives

Transfers of realty ownership

Transfer by gift or sale involves document called a deed

Public recording of deeds by county recorder

Title can be tracked in a grantor-grantee index

Real estate sales contracts

Here's the Department of Real Estate guide and Nolo Press

RESPA/ HUD-1 statement at closing for residences

Calif requires seller disclosure of all known material latent defects.

Is a ghost -- a haunted house -- a "material defect"? What if the property is in a "buyer beware" state, such as New York?

Transfers by gift, inheritance

Tax sale, with period of redemption

Adverse possession may become title

  • Statutory time (5+ yrs in CA -- CCP Sec. 321 ff.)
  • Open visible notorious
  • Actual exclusive
  • Continuous and peaceful
  • Adverse

Rights to use: Non possessory interests

see concept summary in text. Person on land of another without any of these rights commits the tort of trespass


right to use property of another for limited purpose, or to control another's use of property

  • Easement "appurtenant" runs with the land
  • Easement in "gross" belongs to a particular person

License: right to enter for short time

"Profit a prendre": right to remove something, such as minerals

Chapter 7: Intellectual Property

How can a thought or an idea be "property"?

"If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. "

Thomas Jefferson, letter to Isaac McPherson, Aug. 13, 1813.

In addition to writing the Declaration of Independence and being the third President of the US, (having earlier served as Vice-President, as Secretary of State and as Ambassador to France), Jefferson was also an inventor (moldboard plow, cipher wheel and spherical sundial) and the first head of the US "Board of Arts" -- the predecessor of the Patent Office

Business Identity, Reputation and Know-How

Counterfeit Goods

Common law tort of representing false origin for goods. Fake Rolexes and fake designer clothing.

Issue is whether the real goods have acquired a secondary identification with their source. Fake Rolex vs. real watch that happens to look like a Rolex. (The "Romex")

Trade Libel

Publication of false statement about competitor's goods, etc. with malicious intent to injure.

Lanham Act (US Trademark law) allows injunction and damages against false comparative advertising

Misappropriation of Trade Secrets

A process, formula, know-how, customer list etc. that is *treated* as a secret by a business

Legal protection only against *illegal* acquisition -- reverse engineering and independent invention are OK

Note role of corporate confidentiality agreements

1996 Federal "Economic Espionage Act"

Made misappropriation of such secrets a Federal crime. Question the real, as opposed to symbolic, effectiveness of criminalization



A grant of a limited period (now 20 yrs) of legal monopoly to the inventor of a novel, non-obvious, useful machine, process or composition of matter

The exclusive right to make and use the invention, and to license or deny to others (even if independent invention) such rights

Grant is in exchange for public disclosure

Administered by the US Patent & Trademark Office

A quasi-adversary process, with patent examiners as "devil's advocates". Once issued, patent is enforced by an "infringement" suit. Validity can be challenged again as a defense to infringement.

Hi! I'm your friendly patent examiner.

Sometimes things slip by the examiners. The IgNobel Prize for 2001 went to the Australians who had granted a patent to the inventor of a "circular transportation facilitation device" .

Trivia Question #1:

Who was the most famous patent examiner of all time?

Significant Current Issues

extension of "process" to software and business techniques, such as tax planning. Amazon recently lost a proceeding involving a patent claim for "1-click shopping". Extension of patentability to biogenetics.


Federal statutory right of authors, musicians, etc. to control "reproduction, distribution, performance and derivatives" of their work, with the ability to "license" rights and sub-rights. Administered by the US Copyright Office in the Library of Congress

Current problems with copyright: the uncertainty as to "fair use" and the technological ease of duplication. The copyright paradigm is the printing press: 1-to-many distribution

Distinguished from Patents

Duration: is life of author + 70, or 95 years from publication if "work for hire". Note 1998 extension, and significance for "Steamboat Willie".

Copyright protects only the expression of an idea, not the idea itself.

Protects against copying, but original duplicate composition is OK (e.g. PC ROM-BIOS reverse engineering)

Note difference from patents, where independent invention is *not* a defense (tho it may be evidence as to "non-obviousness").

Second Trivia Question:

Who invented the telephone?

Copyright "inheres in the work". Not an adversarial process. No registration necessary, except as prelude to suit. (c) year and author is permissive to clarify author and give notice of the claim

There are "compulsory licenses", with royalties set by an administrative board, for cable TV, web radio, and "mechanical" rights for audio recordings of "previously released" musical works

Concept of "derivative work"

Fair Use: Section 107

An important but fuzzy public protection against the privatization of language. Note the economic/political imbalance that tends to over-protect intellectual property and turn (c) into economic rent. MGM v. Grokster case


A statutory extension of the tort of "unfair competition", deceiving the public as to origin of goods or services. Federal law applies if goods were sold in interstate commerce,

Indefinite (10 yr renewal) protection for trade/service marks which are associated with a particular maker of the goods

Need a unique "distinctive" name/mark, or at least an ordinary word which has acquired a 2ndary meaning indicating particular source of the goods

Problem: if used too commonly/broadly, becomes generic, like "aspirin" (originally, the Bayer brand of acetylsalicylic acid)

TM filing: if used in interstate commerce. Purpose of filing: notify world that the mark belongs to someone

Chapter 52: Wills and Inheritances

What happens to property when an owner dies?

Basic Issues:

  • Who will become the new owner of the property.
  • How resolve outstanding/pending transactions and claims?
  • How change documents of title?

The role of the "will"

Very long history: source in Rome @ 300 BC, which had evolved a truly awful intestate default system

Estate administration generally required in US/English systems

"Intestacy" (no will -- state determined pattern)

California rules are in Probate Code Sec. 6400 ff.

What's a "Will"? It's like a letter to a judge

"Probate": the testing of the will and the supervision of administration

Alternatives: documents of title contain the transfer provisions

Popular use of Joint Tenancy, Pay on Death accounts, etc.

Trusts: the legal fiction for separating ownership and control. Again, the old English law/equity distinction

Footnote: The Invention of the Telephone

Elisha Gray filed a "caveat" -- a warning of an impending patent claim -- two hours after Alexander Graham Bell filed his patent application for an (unworkable) prototype telephone. Bell's application concluded:

"Having described my invention, what I claim, and desire to secure by Letters Patent, is as follows:

"1. A system of telegraphy in which the receiver is set in vibration by the employment of undulatory currents of electricity, substantially as set forth.

"2. The combination, substantially as set forth, of a permanent magnet or other body capable of inductive action, with a closed circuit, so that the vibration of the one shall occasion electrical undulations in the other, or in itself, and this I claim whether the permanent magnet be set in vibration in the neighborhood of the conducting-wire forming the circuit, or whether the conducting-wire be set in vibration in the neighborhood of the permanent magnet, or whether the conducting-wire and the permanent magnet both simultaneously be set in vibration in each other's neighborhood.

"3. The method of producing undulations in a continuous voltaic current by the vibration or motion of bodies capable of inductive action, or by the vibration or motion of the conducting-wire itself, in the neighborhood of such bodies, as set forth.

"4. The method of producing in a continuous voltaic circuit by gradually increasing and diminishing the resistance of the circuit, or by gradually increasing and diminishing the power of the battery, as set forth.

"5. The method of, and apparatus for, transmitting vocal or other sounds telegraphically, as herein described, by causing electrical undulations, similar in form to the vibrations of the air accompanying the said vocal or other sounds, substantially as set forth.

"In testimony whereof I have hereunto signed my name this 20th day of January, A.D. 1876.


Extensive litigation followed. Bell and his financial backers finally won in the US Supreme Court -- in a 5 to 3 decision. See The Telephone Cases, 126 US 1, 531 (1888) <BACK>

notes and format (c) 2001-08 Robert H. Daniels