18 Intellectual Property Rights as “Property”:
A Basis for Discussion on Information Transaction Contracts(*)
Long-term Overseas Research Fellow for FY2005: Maiko Fuchi(**)
This report consists of three parts. The first part outlines the basis for justification of
intellectual property rights that is actively discussed in the United States, with a focus on theorigin and positioning of each theory. The second part reviews the arguments on property in the
United States. Property is a compulsory subject in US law schools. This part gives an overview ofthe entire picture of property by discussing acquisition of property, details of the rights, therelationship between private individuals concerning property, and then the relationship between
private individuals and governments concerning property. In relation to each point, intellectual
property-related court decisions are introduced and compared. An attempt has been made to
explore where intellectual property rights should be positioned in the United States where, unlikein the continental legal system, there is no concept of distinguishing between real rights andclaims. The final part introduces some articles that serve as the key to thinking where to position
intellectual property rights in the system of property, so as to contribute to future studies on theideal design of intellectual property systems.

I

Purpose of This Report

It is common knowledge that social
interest in and expectations from intellectual
property have grown markedly. Intellectual
property has come to be regarded as the key
to economic reconstruction. The word
“intellectual property-based nation,” which isused as the target vision for Japan, precisely
indicates this fact. In addition, information,
which had been traded in the form of
tangible objects such as phonograph records
and books, has become subject to trade in
itself without such media due to thedissemination of digital technology.
It is only in the past decade that anawareness of “protection of intellectual
property needs to be strengthened” hasspread in society.
As a researcher of intellectual property
law, the author does not deny that
intellectual property should be protected.
Rather, the author thinks that intellectual
property should be protected actively. What
(*)

(**)

the author finds to be an issue is that“appropriate
information”
shouldbeprotected “to an appropriate extent.” Assuggested by the move to extend the term of
copyright protection, it seems that protectionof intellectual property is being everstrengthened. However, strong intellectual
property rights are like a two-edged sword.
Strong intellectual property protection does
indeed increase the current profits of theowners of the intellectual property rights,
but when we turn our eyes to society as awhole, it is not necessarily clear whether
such protection leads to increasing theinterests of society. It is because an
intellectual property right — be it a patentright or a copyright —results from atechnological innovation or an activity tocreate a copyrightable work based on theachievements of its predecessors.
The purpose of this report is to review
the discussions on property in the UnitedStates and to attempt to position intellectual
property based on its relationship with theThis is an English translation of the Japanese summary of the report published under the Industrial Property
Research Promotion Project FY2007 entrusted by the Japan Patent Office. IIP is entirely responsible for any errors
in expressions or descriptions of the translation.
doctorial candidate, School of Legal and Political Studies, The University of Tokyo●

IIP Bulletin 2008160 ●points at issue. While proceeding with theresearch in the United States, the author
keenly felt the need to first examine whereintellectual property rights should bepositioned in the entire scope of property
rights and then to explore the possibility ofcontrolling those rights by contract.
Intellectual property rights are understood
to be monopolistic rights granted for pieces
of information that have been selected as
those that deserve to be the subject matter ofthe respective types of intellectual property
rights from among the various kinds andlarge amounts of information that exist insociety. They are no different from intangible
objects in the sense that there is competition
over acquisition of the rights, there isprovision of and exclusion from access to thesubject matter, and there is conflict between
private individuals or between a private
individual and the public. It will be an
eventual goal to identify such common issues
through the development of discussions on
property.

II

Basis for Justification of Intellectual
Property Rights: Discussions in the
United States

1

Major Four Theories ConcerningIntellectual Property Rights

In response to the recent improvementin the economic and cultural status of
intellectual property rights, arguments seemto have become ever more active in the
United States concerning theories about
intellectual property rights from theviewpoints of law, economics and philosophy.
This chapter overviews US arguments overthe basis for the justification of intellectual
property rights, based on an article(*1)
written by Professor William Fisher at theHarvardLaw
Schooloutliningsucharguments.

Professor
Fisherindicatesthatarguments in recent years have been overthe following four approaches.(*2)
The first approach is a utilitarian
approach(*3) advocating that intellectual
property rights should be designed in such a
way as to maximize “net social welfare.” Inother words, intellectual property rights
should be designed so as to optimize thebalance between their characteristics asmonopoly rights, which stimulate inventive
andcreative
activities,
and
their
characteristics as rights, which obstructpeople in general from enjoying the results ofsuch creative activities. This is called“utilitarianism.”
The second approach, which has become
prevalent recently, originates from John
Locke’s theory. It is based on the postulatethat a person who labors upon resources thatare either unowned or “held in common” hasa natural property right to the fruits of hisor her efforts - and that the state has a duty
to respect and enforce that natural right.
These ideas, originating from Locke’s theory,
are widely thought to be especiallyapplicable to the field of intellectual property,
where the pertinent raw materials (facts andconcepts) do seem in some sense to be “heldin common” and where (intellectual) labor
seems to contribute so importantly to thevalue of the finished product. This is called
the “labor theory.”(*4)
The third approach takes a view thatprivate property rights are crucial to thesatisfaction of some fundamental humanneeds or interests and that policymakers
should thus strive to create and distribute
entitlements in ways that can satisfy such
satisfaction. This theory has been derived
from the work of Kant and Hegel. This iscalled the “personality theory.”(*5)
The fourth approach is an argumentthat property rights in general—andintellectual-property
rightsin(*1) William Fisher, “Theories of Intellectual Property,” Stephen Munzer, ed., New Essays in the Legal and Political
Theory of Property, 168.
(*2) Id. at 169.
(*3) Id. at 169-170.
(*4) Id. at 170-171.
(*5) Id. at 171-172.
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161 ●IIP Bulletin 2008

particular—should be shaped so as to help
foster the achievement of a just andattractive culture. Persons who make thisargument typically draw inspiration fromtheories including those of Jefferson and theearly Marx. This approach has a similar
theoretical direction as utilitarianism, but isdifferent in that it places emphasis on a“desirable society” rather than the “social
welfare” emphasized in utilitarianism. Thisapproach is called the “social planningtheory.” (*6)

2

Summary

Professor Fisher indicates that thesefour approaches contain problems. (*7)
Nevertheless, he discusses the usefulness ofthese approaches from the viewpoint thatthey can help identify resolutions ofparticular
problems
pertaining
tointellectual property rights (such as theright of publicity) and that they can foster
conversations
among
the
variousparticipants in the lawmaking process.(*8)
There are some arguments about suchbasis for the justification of intellectual
property rights in Japan as well, but thearguments are far less active than in the
United States. The arguments in the UnitedStates may not be directly applicable to
Japanese intellectual property law, which
has been largely influenced by civil law, but
as Professor Fisher notes, these arguments
could prove useful as a theoreticalbackground when examining new issues.

III Discussions on Property Law in
the United States(*9)
1Introduction

Unlike civil law, Common law does nothave the concept of distinguishing between
property rights and contract rights. However,property and contracts are the two fields ofstudy that roughly correspond to property
rights and contract rights. It has gradually
become clear recently that, in legal study,
property has some connection with the studyof civil law, as seen in researchers ofAmerican law focusing on the civil law
principle that property rights shall belimited to those that are prescribed instatutes.
Study on property is also closely
associated with intellectual property rights.
The details of property have been formed
historically through common law, but suchdetails have changed over time. Moreover,the details of property should not necessarily
be understood as those having been granted
under natural law. Rather, the extent ofproperty may be demarcated by government
regulations or the like. Simply put, contract
law and property law are two different kindsof rules concerning the attribution of“things,” and in some cases they might beinterchangeable. If so, when we think about
an intellectual property right as well, it
would be better to think what kind of
property (or contract) it is and what kind of
property or contract it should be positioned(or designed) as in order to be able to achieve
its intended purpose, rather than simply
thinking about whether or not it is property.

2Acquisition of Property

How does a person acquire property? In
arguments in the United States, the question
(*6)
(*7)
(*8)
(*9)

Id. at 172-173.
Id. at 176.
Id. at 194.
The discussions in this chapter owe much to the lectures given by Professor David Barron at the Harvard Law
School in Academic Year 2006 to 2007 and the casebook written by Professor Joseph William Singer, which was usedas the textbook for those lectures. See Joseph William Singer, Property Law: Rules, Policies, and Practices, 4th ed.,(Aspen, 2006).
●

IIP Bulletin 2008162 ●

regarding this point is whether or not thecompetition for acquisition was fair. This
question has been discussed firstly from thestandpoint of which of the parties concerned
gains possession of a wild animal(*10) or crudeoil, and secondly from the same standpoint
in regards to information. For example, in
INS v. AP (1918),(*11) the court stated that
prompt news reports known as hot news
could be regarded as quasi property, and byfinding a problem with regard to INS’ actsolely in relationship to AP, held that an act
to prevent AP from gaining a return on
investment
was
unfaircompetition(misappropriation), which is impermissible
and can be suspended. In NBA v. Motorola(1997),(*12) the presence or absence of freeriding affected the conclusion.

4

This section examines how sucharguments on the acquisition of and accessto property relate to intellectual property
rights. For example, in Sony Corp. v.
Universal City Studios (1984),(*15) a famouscase concerning fair use, the US Supreme
Court concluded that Sony could not be held
liable under theories of contributory
infringement or vicarious liability for sellinghome video tape recorders. In relation to theissue discussed in this report, it is very
interesting that the court has paraphrased“… violates any of the exclusive rights of the
copyright owner” as “trespass” (trespasses
into his exclusive domain).

53Development

Access to Property and Exclusionfrom Access to Property

Who can access property? Is it possible
to exclude other people from accessing
property? Regarding these questions, there
are various issues including adverse
possession, limitation to exclusion fromaccess to property based on public order, andpublic trust.
Particularly, in discussing access toproperty, we cannot avoid the question “inwhich cases is entry to property regarded as
trespass,” or from the owner’s viewpoint,“what kinds of persons can be excluded.” Themost important court decisions regarding
this question is State v. Shack (1971). (*13) In
connection to this issue, it is interesting that,while the right of access tends to be mainly
discussed with regard to public informationin Japan, the original implication of theright of access had been related toproperty.(*14)

Private Land Use

In this section, the relationship between
multiple parties over land use becomes anissue from the perspective of the relationshipbetween private individuals. Specifically, thepoints in question include easement, whichcorresponds to “chiekiken” (servitude) inJapan, and covenants, which developed ascontractual arrangements between parties asa way of circumventing the courts’ moves torestrain easement. Since a covenant is acontract, it should not be made effective
against third parties. However, courts began
to recognize the effects against third parties
when a certain requirement had beensatisfied.(*16) Such arguments concerning
covenants would provide useful material for
examining contracts on use of intellectual
property rights from the standpoint of
whether or not it is possible to claim theeffects of a contract on use against third
parties.

(*10) For example, Pierson v. Post, 3 Cai. R. 175, 2 Am. Dec. 264 (N.Y. 1805) and Elliff v. Texon Drilling Co., 210 S.W. 2d
558 (Tex. 1948).
(*11) International News Service v. Associated Press , 248 U.S. 215 (1918).
(*12) National Basketball Association v. Motorola, Inc. , 105 F.3d 841 (2d Cir. 1997).
(*13) State v. Shack , 277 A.2d 369 (N.J. 1971).
(*14) Uston v. Resorts International Hotel, Inc., 455 A.2d 370 (N.J. 1982).
(*15) Sony Corp. v. Universal City Studios , 464 U.S. 417 (1984).
(*16) 48 Spencer’s Case , 77 Eng. Rep. 72 (1583).
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163 ●IIP Bulletin 2008

6

Public Land Use

There are also various points in question
regarding land use from a public perspective,
such as nuisances, zoning and taking. Zoningis the division of a region into separate
districts with different regulations. Based on
the general regulatory authority of the state
government,
the
state
authorizes
municipalities
toregulate
land
use.
Meanwhile, taking, referred to in Japan as“kōyō shūyō” ([public] expropriation), is
recognized only when property is taken for
public use with just compensation. Suchmatters should be regarded as elements ofan interconnected regulatory system for land
use by private individuals as opposed to acollection of individual regulations.
A major court decision, Penn Central
Transportation Co. v. New York City
(1978),(*17) is examined below. The plaintiff,
the owner of Grand Central Terminal locatedin the center of New York City, planned toconstruct an additional building overtop thestation. However, New York City had an
ordinanceforpreserving
historicalstructures (zoning regulation), and theLandmarks Preservation Commission, which
was authorized to approve changes to theexteriors of such historical structures,
disapproved of the construction of anadditional building. In this case, questions
were raised as to whether or not thisdisapproval constituted a taking of theplaintiff ’s real estate. Although the court
found that air rights were present in thespace above Grand Central Terminal, it
stated that taking of the land as a wholeshould be considered, and concluded that thedisapproval did not constitute a taking as it
was still possible for the plaintiff to earn areasonable return on their investment in theland.
Such questions concerning land use are
not unrelated to intellectual property rights.

It may be possible to refer to this series ofarguments when examining compulsory
licenses or the possibility for extending or
shortening the term of protection (although
discussions are usually only held on theextension of the term). If a compulsory
licenses or extension/shortening of the termis regarded as a taking, there will be a needfor compensation. It will be an interesting
experiment to examine this point, including
making an assessment of the amount ofcompensation.

IV Suggestions on Intellectual Property
Law: Insights from Calabresi andMelamed’s Article and Hansmann
and Kraakman’s Article
1

ExaminationofMelamed’s Article●

andOne of the most important articles
concerning property is “Property Rules,
Liability Rules, and Inalienability: One viewof the Cathedral”(*18) authored by Professor
Calabresi and Mr. Melamed in 1972. Thissection examines the property rules, liability
rules and inalienability that were proposedin this article.
According to this article, property
rules(*19) are rules that grant a person
absolute title to conduct a certain act or
grant a person title to never being subjected
to a certain infringement and liability
rules(*20) are rules that require a person toaccept an infringement by another person aslong as there is a payment of money, such ascompensation for damages, or that any
person can conduct a certain act as long as
the person pays money. In addition,
inalienability(*21) is a rule that does not allow
the trading of certain property even by acontract.
These three rules are extremely
significant when thinking about the design(*17) Penn Central Transportation Co. v. New York City 438 U.S. 104(1978)(*18) 85 Harvard Law Review 1089 (1972).
(*19) Id. 18 at 1090.
(*20) Id. 18 at 1091.
(*21) Id. 18 at 1092.

IIP Bulletin 2008

Calabresi

164 ●of intellectual property right systems. In thecase of patent rights, a system design basedon property rules would fundamentallyprohibit infringement, while a system design
based on liability rules would allow any
person to exploit patents as long as they pay
license fees.

2

Suggestions from
Kraakman’s Article

HansmannandAlthough not directly quoting arguments
on property rules and liability rules,
Hansmann and Kraakman’s article(*22), hasapplied the ideas of Calabresi andMelmand’s article.
Professor Hansmann and Professor
Kraakman argue that, when two people
jointly own rights for a single piece ofproperty, there is a need for a means toconfirm that they share a common
recognition of their rights (the coordination
problem). Furthermore, even if this problem
were resolved, there is a need to ensure thata party would not intrude into the otherparty’srightsopportunistically(theenforcement problem). Resolution of thesetwo problems depends on whether or notthere is sufficient means of verification, butbasically, a contract is the primary means forresolving the coordination and enforcement
problems. Nevertheless, people having
property rights for a certain piece of property
are not always in a contractual relationship,
so the central role of property is to provide amechanism for resolving the verification
problem.
Meanwhile, possession is the mostprimitive and typical verification rule. It is
possible to establish rules that are based
solely on possession for all types of assets.
However, although it is possible to create
rights that do not involve possession by acontract, such rights are not effective
against a third party. At the same time, rules
solely based on possession are limited

inasmuch as they do not enable use ofcertaindividedrights.
Under
thesecircumstances, verification rules other thanpossession have become necessary, and suchrules have been created in all legal domains.
In order to examine these rules,
Professor
HansmannandProfessor
Kraakman focused on the rights of artists,
particularly the right of integrity. Based on
an assumption that the following four typesof rules concerning the right of integrity
would be used, they examined the outcomesof the respective rules: (1) a rule in which
the right of integrity cannot be altered bycontract (fixed rights, no contracts), (2) arule in which rights are recognized under thelaw and they can be altered by way ofcontracts (fixed rights with contractual
alterations), (3) a rule in which property
rights are established by means of labeling(property rights by labeling), and (4) a rulein which property rights are establishedbased on registries (property rights byregistry). (*23)

V

Closing Remarks

The discussions in this report canroughly be divided into three sections.
Chapter II, following Chapter I, outlined
the arguments on the basis for justificationof intellectual property rights in the UnitedStates. Discussions in this field are not very
active in Japan. These arguments are
expected to be useful when thinking aboutprotecting new types of information in Japanin the future.
Then, Chapter III reviewed court
decisions and arguments related to property
rights in general. First, the acquisition ofproperty rights and the competition for suchan acquisition were discussed, followed bydiscussions on access to property andexclusion from access to property. The
discussions revealed that the relationshipbetween people carries more weight than the(*22) Henry Hansmann and Reinier Kraakman, “Property, Contract, and Verification: The Numerus Clausus Problem andthe Divisibility of Rights,” 31 Journal of Legal Studies, 373 (2002).
(*23) Id. 22, at 386-395.
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165 ●IIP Bulletin 2008

relationship between a thing and a personwith regard to property. Next, in the section
about private land use, the relationshipbetween people concerning land was
examined from the viewpoint of whether thecontract was effective against third parties.
The examination provided suggestions on therelationship between intellectual property
rights and contracts. Finally, public land use
was discussed. In this section, the questionof whether or not property use wasrestrained in the relationship between
private individuals and the public (actual
governments [federal or state governments]
rather than public in the vague sense). In
this manner, the viewpoint concerning
conflicts over property was shifted from therelationship between private individuals to
the relationship between private individuals
and the public.
Chapter IV indicated that the current
intellectual property right systems are not
the absolute systems by referring to thediscussions in Calabresi and Melamed’s
article and Hansmann and Kraakman’s
article. It is possible to change the degreeand method of protection for things(including information) by using contract
and by other means. Also, there is apotential for diverse variations. The author
kept it in mind to make this section into
useful material that could contribute tofuture discussions on the design ofintellectual property right systems.
The fact that the current intellectual
property right systems are not absolute has
also been clarified by a system called “NoankMedia,”(*24) which is a new type of systemcreated mainly by Harvard Law School
professors. In Noank Media, copyrightowners such as record companies and film
companies grant Noank licenses to distributedigital copies of their copyrighted works incertain countries. Noank concludes contracts
with Internet service providers (ISPs)
allowing them to provide the copies to theircustomers. Each ISP pays a fee to Noank onbehalf of its customers. While the idea ofmaking copyright a right to remuneration
had been suggested by Professor Nobuhiro
Nakayama in his book Maruchi media tochosakuken (Multimedia and copyright) in
as early as 1996, Noank can be considered as
one type of the embodiment of this idea.
The author is deeply grateful for being
able to gain, in this long-term overseas
research, a valuable opportunity by taking
the time to learn and examine in depth theentire picture of property, regarding which
no sufficient materials can be found in Japan.
The author would like to use the knowledge
acquired in this research as the basis for
examining the ideal protection of intellectual
property rights in the future. It is hoped that
this report will serve as the basis fordiscussing the justification of restraints fromthe property right aspect.

(*24) For the outline of the system, see http://www.noankmedia.com●

IIP Bulletin 2008166 ●