Initial Allocation of Rights; Economic Essentials, Relativity of Title

Question 1

According to Johnson v. M’Intosh (1823), are land title transfers from Indian tribes to private individuals prior to the American Revolution recognized in a United States court?

Answer 1

No.

• “title to lands, especially, is and must be admitted to depend entirely on the law of the nation in which they lie”
• Discoverer gets right to perfect title by occupancy, conquest, or purchase.
• However, the treaty ending the American Revolutionary War transferred sovereignty and power of the lands under such transfers from the British to the United States.

Question 2

What are the 2 types of theories of law?

Answer 2

descriptive and prescriptive

Question 3

What is a descriptive theory of law? Name one

Answer 3

it’s positive- what is

Evidence: C.J. John Marshall in Johnson v. M’Intosh USSC 1823: “Conquest gives a title which the Courts of the conqueror cannot deny . . . ”

Question 4

What is a prescriptive theory of law? Name the 5

Answer 4

It’s normative- what should be

Efficiency, safety, privacy, happiness, justice

Question 5

According to Pierson v. Post (1805), is pursuit alone enough to gain title

Answer 5

No.

“. . . Pursuit alone vests no property or right in the huntsman. . .”

Question 6

For wild animals, what establishes title?

Answer 6

First possession- capture

Question 7

How does one practice possession?

Answer 7

Physical control or at least the intent to assert control over property

Question 8

What is the tragedy of the commons?

Answer 8

It is in the individuals best interest to exploit a collective resource, but it’s in the community’s interest that the collective resource be managed sustainably

Question 9

1. What is one way to prevent the tragedy of the commons?

2. What are 2 problems that would make this solution not feasible?

Answer 9

1. One way is to assign property.

For example, for the whaling industry, if one owner owned rights to all whales, that owner would try to
leave enough whales to reproduce and would protect the whales from being killed by others.

2. A. Biological problem of dividing some forms of property (ex: hard to divide rights to whales- migration range)
   B. Political problem: no one would agree to give all the rights to one person or nation

Question 10

Externalities

Answer 10

Exist whenever some person makes a decision about how to use resources w/o taking full account of the effects of the decision. This person ignores some of the effects- costs or benefits that result- because they fall on others- are external to the person.

Question 11

What is one way to solve the problem of externalities?

Answer 11

ban the behavior by regulation

Question 12

What happens when the net externalities are negative?

Answer 12

rational actors might carry on too much of the activity. (Too much is defined by efficiency, getting the most from our resources.)

Question 13

What happens when the net externalities are positive?

Answer 13

rational actors will carry on too little of the activity.

Question 14

What happens when there are zero net externalities?

Answer 14

the optimal decision for the individual is also the optimal decision for society. Private cost and social cost do not diverge, they are the same. Efficient private decisions will be socially efficient.

Question 15

How can we internalize the externalities so that the actor will make the socially efficient
decision?

Answer 15

– Arthur Cecil Pigou: taxing or subsidizing
– Ronald Coase: bargaining; affected parties make offers to decisionmaker (Nobel prize)
– Harold Demsetz: property
– Garrett Hardin: efficient private behaviors can create a Tragedy of the Commons.
– Neil Komesar: intertwined utility curves
• Stake’s wording: sympathy internalizes externalities
– Elinor Ostrom: social coordination can internalize externalities and can reduce strategic behaviors
(Nobel prize)

Question 16

What is the point of efficiency?

Answer 16

to get the most utility, benefit, or happiness out of resources.

Question 17

How do we measure utility?

Answer 17

We approximate utility with monetary value. The prices people pay reflect the utility they will get from the resource. The more they will pay, the more utility.

Question 18

What is the problem with using money to approximate utility?

Answer 18

The problem is that equal money bid does not
reflect equal utility.

Example: An Example of the problem with bidding for resources: Suppose you and Warren Buffett are both bidding for an item on eBay. Who do you think will win the auction? If Warren wins, are we sure that he gets more utility from the item than
you do?

Question 19

Does a remedy exist for a property owner whose use of his property for profit is frustrated by the malicious act of another?

Answer 19

Yes.

Keeble v. Hickeringill (1701) a man was liabe for shooting a gun that caused the wildfowl of another property to scatter

Question 20

What property rule applies to oil and gas?

Answer 20

first capture rule
*But these rules led to inefficient production- too much too fast.
So, legislatures (and courts) have created new rules that are less wasteful.

Question 21

What is the American rule for water rights and what is the rule for some western states?

Answer 21

• American rule: first grab, but limited to reasonable use that does not damage other wells drawing from the aquifer (that limitation leads to litigation on reasonableness).
  – Some western states: prior appropriation; right to continue grabbing what you grabbed
  the past and put to reasonable and beneficial use.

Question 22

What is the “first in time” “bourgeois” strategy?

Answer 22

• Those who did not respect possession tried to take from those who would defend or failed to defend when opponent would have deferred
• it is respect for possession

Question 23

In what 2 scenarios would respect for possession (the Property Instinct, the Bourgeois Strategy) break down?

Answer 23

1. possessor is not an equal to the non-possessor

2. resource value is high enough compared to cost of fight

Question 24

According to Popov v. Hayashi (2002), Is a person entitled to an interest in a piece of property if they achieve significant steps towards possessing said property, but are thwarted due to the unlawful conduct of another?

Answer 24

Yes.

Question 25

What is conversion?

Answer 25

it is the wrongful exercise of control over something owned by another

Question 26

In Popov v. Hayashi (2002), what does a person need to establish in order to recover damages under conversion?

Answer 26

pre-possessory interest

Question 27

What are the 3 rationales for giving rights to creators for their creations?

Answer 27

• Locke’s justice: mix labor with elements
• Simple fairness: you made it, you own it
• Utility: incentive to create

Question 28

According to INS v. Associated Press (1918), does a continuing property right exist in published news such that appropriating the published news gathered by another for further commercial purposes constitutes unfair competition in trade?

Answer 28

Yes

Question 29

According to INS v. Associated Press (1918), does a continuing property right exist against the public in uncopyrighted news matter after it is initially published?

Answer 29

No. “the news of current events may be regarded as common property” (the public cannot be excluded- but competitors can)

Question 30

1. According to INS v. Associated Press (1918), what is the type of property right that exists for news publishers in reference to other publishers producing their news stories?
2. What was the courts reasoning for why there is a property right for news publishers against competitors but there is no property right against the public?

Answer 30

1. Because “property” usually means rights against the public, there is no “property” in a news story (when using this definition of property). However, when referring to property rights of one news source against a competitor, a quasi-property right exists: there is a copyright in the text, and a cause of action for unfair competition.
2. appropriating the published news gathered by another for further commercial purposes constitutes unfair competition in trade and will unfairly injure the business of the other.

Question 31

What are the 2 elements of a “public good”?

Answer 31

non-rivalrous and non-excludable

Question 32

What does non-excludable mean?

Answer 32

when it is difficult to prevent people from using it.

example: oxygen in a stuck elevator

Question 33

What does non-rivalrous mean?

Answer 33

enjoyment by one does not preclude enjoyment by another

example: online enjoyment of a concert or a good lecture

Question 34

Is the news a public good?

Answer 34

-It is non-rivalrous because if I enjoy a news story, it does not prevent you from enjoying it.
-However, it is not necessarily non-excludable:
»Without laws, no natural barriers, available to all; a public good
»With laws preventing republication, not available to all, excludable; not a public good

SO, the answer: it depends on what the law is

Question 35

What would happen to the cost of supplying news if the news was non-excludable, therefore making it a public good?

Answer 35

Because the “reward” would be so limited (not as many sales), the cost of producing the news would be “prohibitive” (So high or burdensome as to discourage producing it)

Question 36

If news is a public good, what is a possible solution to the repercussions?

Answer 36

the government could supply it

Question 37

What are 2 sectors that face potential public goods problems, both of which need government intervention to reach efficient level?

Answer 37

1. Military defense

2. News and Information

Question 38

Why do we need government intervention to reach an “efficient level” for military defense?

Answer 38

Want gov’t to provide because don’t want to give a private for-profit company control of our military, giving it more physical power than anything else in the country (including the nation) (it might hold us hostage).

Question 39

What are 2 examples of government intervention that are needed to reach an “efficient level” for news and information?

Answer 39

1. Keep news from being a public good by limiting transfer. That is what the court did in INS v. AP, and that is what the “hot news” doctrine does to a degree.
2. By limiting copying, the government prevents news from being public good and thereby creates an incentive for production of news.

Question 40

What is the “hot news” doctrine (This doctrine is “alive” in some circuits- not all)?

Answer 40

Under this doctrine, a news gatherer may recover from a defendant when the news gathering or collection process involves: significant expenditures; the collected news or information is time-sensitive; the defendant free rides on the collected material; the free writing directly competes with the news gatherers market; and the free writing is likely to diminish incentives to collect news/ information in a timely manner.

Question 41

1. According to Cheney Bros. v. Doris Silk Corp. (1930), may a fabric design be subject to protection from copying in the absence of copyright laws addressing the situation?
2. Why did the court rule this way?

Answer 41

1. No. The common law rule that came from this case is that copying is allowed. Unless the common law or statute expressly states otherwise, a man’s property interest is limited to physical items, which others are free to copy- it is not for the judge’s to grant monopolies
2. The court was interested in preventing a monopoly

Question 42

What would the negative implications be if the court were to grant a monopoly?

Answer 42

The supply will be reduced and the price will be increased. The monopoly price is wasteful because some people do not get the product who would if the price were lower- “A monopolist will often set prices to maximize profit, which will reduce supply; or will reduce supply to increase price, as in raisins.”

Question 43

What would the positive implications be if the court were to grant a monopoly?

Answer 43

monopoly profits create incentive to design

Question 44

Why don’t we want the government to provide news?

Answer 44

The government might censor out bad news about itself.

Question 45

What are the 3 requirements federal law imposes for copyright protection?

What is the benefit of copyright protection?

Answer 45

1. Originality- (the work must be an independent creation of the author and must demonstrate at least some minimal degree of creativity)
2. Work of authorship- (the protection sought is for the expression of ideas, not the ideas themselves)
3. Fixation- (the work is fixed in some kind of tangible medium)

It creates incentives to create

Question 46

What are the 5 requirements federal law imposes for patent protection?

What is the benefit of patent protection?

Answer 46

1. Patentability- (it fits in one of the categories of patentable subject matter)
2. Novelty- (it has not been preceded in identical form in public prior art)
3. Utility- (it offers some actual benefit to humans)
4. Non-obviousness- (it is a sufficiently big technical advance over the prior art)
5. Enablement- (the patent application describes the invention in sufficient detail that “ one of ordinary skill in the art” would be able to use the invention)

It creates incentives to create

Question 47

What are the 3 requirements federal law imposes for trademark protection?

What is the benefit of trademark protection?

Answer 47

1. Distinctiveness- (different from other marks used to describe similar goods and services)
2. Non-functionality
3. First use in trade

It reduces consumer confusion

Question 48

Why protect rights in persona?

Answer 48

fairness, it protects privacy, and efficiency

Question 49

According to White v. Samsung Electronics America (1993), does the common-law right of publicity protect a celebrity’s identity from unauthorized commercial exploitation?

Answer 49

Yes.

Question 50

What is a a limited access commons?

Answer 50

A limited access commons is an arrangement whereby a group of individuals permits each group member to exploit the collective resource, but outsiders are prohibited from doing likewise. Limited numbers & hard outlooks tend to reduce strategic behavior among members, thus facilitating constructive collective action.

Question 51

What is the economic theory of property rights

Answer 51

the purpose of private property rights is to enhance social welfare by maximizing the value of scarce resources

Question 52

can the government take realty from landlords and sell it to tenants?

Answer 52

Yes. In the Hawaii Housing Authority Case, the government of Hawaii could use the power of eminent domain to do this

Question 53

According to Moore v. Regents of the University of California (1990), will a patient’s consent to a medical procedure be effective if the physician failed to disclose her personal research and economic interests beforehand?

Answer 53

No. A physician must disclose all personal interests in a medical procedure that may influence her professional judgment before securing the patient’s informed consent.

Question 54

According to Moore v. Regents of the University of California (1990), does a patient continue to have ownership rights in his cells after they leave his body?

Answer 54

No. Once cells leave a patient’s body after surgery, she no longer has sufficient ownership rights to uphold a conversion claim.

Question 55

Is it possible to have property without having the right to sell it?

Answer 55

Yes

Question 56

In Moore v. Regents of the University of California (1990)- the spleen case- what are two policy analysis questions we could ask, when considering property rights, and in terms of efficiency?

Answer 56

• Would initial allocation matter since there might be impediments to transfer?
• In whose hands is the spleen worth more, probably?

Question 57

According to Moore v. Regents of the University of California (1990), what were 2 reasons the court gave for why Moore had no property interest in his cells or the patent, and was unable to state a cause of action for conversion?

Answer 57

1. Moore did not expect to retain possession of his cells after surgery.
2. The lymphokines that Golde and Quan produced from Moore’s cells have the same molecular structure in every human; they are not unique to Moore. The patent was for a cell line that is distinct from Moore’s cells.

Question 58

According to Armory v. Delamirie (1722), does finding an item entitle the finder to sue for its return when another party takes it from him?

Answer 58

Yes. The finder’s possessory rights are superior to everyone else’s except for those of the true owner.

Question 59

In Armory v. Delamirie (1722), what was the basis of P’s superior title and right to return?

Answer 59

P was the prior possessor. Prior possession suffices to bring an action in trover.

Question 60

What is trover?

Answer 60

A legal action to recover a chattel unlawfully appropriated by another, or its value at the time of its appropriation.

Question 61

Changing some of the facts in Armory v. Delamirie (1722), what would the ruling be if the person who lost the jewel shows up and sues the sweep’s boy?

Answer 61

The person who lost the jewel would have superior rights to the jewel. “the finder . . . has such a property as will enable him to keep it against all but the rightful owner or prior possessor . . .”

Question 62

Estray statutes apply today to found items in many

jurisdictions. What is an estray statute?

Answer 62

Usually applies to stray animals but may also apply to lost property generally- the finder of a lost item or animal advertise the find and/or report it. After some time, the finder may keep it.

Question 63

According to Anderson v. Gouldberg (1892), may one in possession of illegally acquired property assert a claim for replevin against a subsequent possessor?

Answer 63

Yes. One who possesses illegally acquired property may advance an action for replevin against one who subsequently takes the property without the possessor’s consent.

Question 64

In Anderson v. Gouldberg (1892), What was the court’s reasoning for finding that one in possession of illegally acquired property may assert a claim for replevin against a subsequent possessor.

Answer 64

Reduce the incentives to take from others, and the incentives to protect against such behavior. Avoid the rent-seeking behaviors.
“Any other rule would lead to an endless series of unlawful seizures and reprisals in every case where property had once passed out of the possession of the rightful owner.”

Question 65

According to Hannah v. Peel (1945), does the finder of lost chattel on another’s property have rights to that chattel superior to the rights of the property owner?

Answer 65

Yes. The owner of land possesses anything attached to or under the surface of the land, but not necessarily things lying on top. The general rule is that the finder of lost property has better claim to it than anyone but the true owner.

The law of who takes between a finder of property and the owner of the land where the property was found, however, remains unsettled.

The fact that the brooch was “lost” inside Peel’s house was happenstance and conferred no possessory interest on Peel.

Question 66

In Bridges v. Hawkesworth (1851), a patron found bank notes in a store. When no owner was found, the patron sought the notes from the shopkeeper. The court ruled that the notes belong to?

Answer 66

the notes belonged to the finder, as the shopkeeper never exercised control over the notes.

Question 67

According to McAvoy v. Medina (1866), is mislaid property subject to the rule that a finder of lost property has a valid claim to the property against everyone except the true owner?

Answer 67

No. Mislaid property is not subject to the rule that a finder of lost property has a valid claim to the property against everyone except the true owner.

Question 68

What is mislaid property?

Answer 68

property that the owner voluntarily placed somewhere and then neglected to remove. Putting an item in a particular location and forgetting to pick it back up is not the same as losing the item.

Question 69

What seems to be the difference between “lost” property and “mislaid” property?

Answer 69

Whether the true owner intentionally placed the property in the location it was found. If intentionally placed, mislaid. If unintentionally placed, lost

Question 70

If mislaid property is found in a store, what is the proper procedure for the finder?

Answer 70

The finder does not have a right to take it and claim ownership. Rather, it is the shop-owner’s duty to use reasonable care to keep the property safe until the true owner returns

Question 71

What is a treasure trove and what is the rule?

Answer 71

Treasure trove is gold or silver intentionally hidden long ago and never retrieved. According to the U.S. common law, treasure trove belongs to the finder. (But the rule has changed
in many states.)

Question 72

What is 1 reason for having a different rule for mislaid items than for lost items?

Answer 72

There is a greater chance of original owner returning to retrieve item (also there is less of a need for an incentive to find)

Question 73

What are 2 reasons for why the common law in many states treat treasure trove differently from mislaid items? After all, both were intentionally placed
and never retrieved.

Answer 73

1. Creates an incentive for others to find?

2. There is little to no chance that the original owner will return

Question 74

Should a $100 bill qualify as treasure trove? (It costs about 14 cents to make a $100 bill; pennies cost about 2 cents)

Answer 74

Paper currency (unless valuable as an antiquity) should not be a treasure trove. Statutes that make it so are misguided from a national point of view.

Question 75

Should a $100 bill qualify as treasure trove?

Answer 75

paper currency (unless valuable as an antiquity) should not be a treasure trove. Statutes that make it so are misguided from a national point of view because it is socially wasteful to incentive people to spends hours of their time to find bills that are only cost .14 to make.

Question 76

What are the 4 benefits of prior possession?

Answer 76

1. Reduces the incentives to take from others, and the incentives to protect against such
   behavior. I.e., it reduces rent-seeking behavior.
2. Protects true owners
3. Reduces costs of proving ownership
4. Provides incentive for finding lost items

Question 77

What is adverse possession?

Answer 77

Judicial interpretation of statute of limitations on cause of action for ejectment

Question 78

What is a bailment?

Answer 78

a bailment occurs when a bailee rightfully possesses a bailed item to which the bailor has superior title (finder, borrower, renter)

Question 79

When is a bailee liable for misdelivery?

Answer 79

bailee is liable to bailor when bailee delivers to someone else (strict liability)

Question 80

When is a bailee liable for loss or damage?

Answer 80

Negligence (old law aid that the standard of care depends on who benefits from the bailment)