Private Law Theory

ABSTRACT
This brief chapter covers two topics: (1) it identifies the special nature of IP entitlements, the better to integrate IP into the fabric of private law theory; and (2) it investigates the ‘origin story’ of IP entitlements, by describing two examples of business-related torts that transformed into true property rights (right of publicity and trademark law), under conditions where the functional advantages of property entitlements were apparent.

What sets private law apart is its conceptual core: corrective justice, the form of justice at work when one private actor harms another. The starting point for private interactions is the baseline entitlements held by the actors in question. For torts, the right to bodily integrity; for contracts, the expectation interests of the parties. Intellectual Property (IP) rights are more complex than the relatively simple entitlements in tort and contracts cases. The major IP rights granted under federal statutes (patents, copyrights, and trademarks) must satisfy validity and registration requirements designed to further various public policies. The rights are typically tested for validity at multiple stages of the IP granting and enforcement process, including when an IP right is asserted against an infringer in a district court action. As a consequence, IP rights cannot be considered settled entitlements for purposes of a private IP enforcement action until validity issues are put to rest: they serve as private law ‘baselines’, but they are contested baselines. But once validity is established between two private parties, an IP right is as solid as any private law entitlement. Which – at this proper stage – opens the way for the full force and logic of corrective justice in IP matters.

The second part of the Chapter traces the transition of two IP rights from their origin as a bundle of individual tort duties into a true property right ‘good against the world’. The advantages of this transition to property are that (a) the bundling of duties into a concentrated right makes those duties more salient; (b) the concentrated legal right is alienable in whole or in part, and owners may grant it on an exclusive or nonexclusive basis, to different licensees in different fields, etc; (c) the IP right forms a legal res, which becomes a valuable business asset around which licensing programs and other business partnerships can be constructed.

The first example of the tort-property transition is the right of publicity, where the transition is fairly recent. The second example comes from further back, in the form of trademark law. The process was different for trademarks because a trademark’s entitlement structure differs from the right of publicity (and all other IP rights). Trademark law has a triadic structure: every competitor (C) of the owner (A) of a well known brand has a duty not to deceive A’s customers (call them B’s), by using a mark confusingly similar to A’s brand. C’s duty to the B’s is breached only when C creates a likelihood that an appreciable number of A’s buyers (the B’s) will think that C’s product comes from A. When A’s brand is protected by a trademark, that property right represents a bundling of all duties on the part of all of C’s (all A’s competitors) not to confuse A’s customers, the B’s. The duties in A’s bundle, in other words, are all owed to the B’s; A protects the interest of the B’s by enforcing the duty of C (and all C’s) not to confuse the B’s. Even so, aside from the distinctive triadic structure of its origin, and post-validity of course, a trademark is for the most part like any other private law entitlement.

Merges, Robert P, Intellectual Property Rights and Private Law Entitlements (September 4, 2023).