Demystifying the right to exclude: of property, inviolability, and automatic injunctions.

• Author: Balganesh, Shyamkrishna

The right to exclude has long been considered a central component of property. In focusing on the element of exclusion, courts and scholars have paid little attention to what an owner's right to exclude means and the forms in which this right might manifest itself in actual property practice. For some time now, the right to exclude has come to be understood as nothing but an entitlement to injunctive relief--that whenever an owner successfully establishes title and an interference with the same, an injunction will automatically follow. Such a view attributes to the right a distinctively consequentialist meaning, which calls into question the salience of property outside of its enforcement context. Yet, in its recent decision in eBay Inc. v. MercExchange, L.L.C., the Supreme Court rejected this consequentialist interpretation, declaring unequivocally that the right to exclude did not mean a right to an injunction. This Article argues that eBay's negative declaration sheds light on what the right has really meant all along--the correlative of a duty imposed on non-owners (the world at large) to keep away from an ownable resource. This duty (of exclusion) in turn derives from the norm of inviolability, a defining feature of social existence, and accounts for the primacy of the right to exclude in property discourses. This understanding is at once both non-consequentialist and of deep functional relevance to the institution of property.

INTRODUCTION I. CONCEPTUALIZING THE RIGHT TO EXCLUDE: A TAXONOMY A. Three Models of Analysis 1. The Right-Privilege Distinction 2. The Two-Tiered Structure of Rights (and Duties) 3. The Entitlement Framework B. Possible Formulations of the Right to Exclude 1. The Claim-Right to Exclude 2. The Privilege-Right to Exclude 3. Remedial Rights to Exclude a. The Vindicatory Right b. The Right to Exclusionary Relief C. Unitary, Bundled, or Disaggregative? II. THE CORRELATIVE RIGHT TO EXCLUDE: GROUNDING PROPERTY IN SOCIAL MORALITY A. The Right to Exclude as a Moral Norm 1. The Principle of Inviolability 2. Inviolability in Practice 3. Inviolability Manifested Through the Right to Exclude 4. Simulations and Extensions: Intangibles B. The Analogy to Contract's Performance Right 1. The Contractual Right of Performance as a Moral Right 2. Enforcing the Promise: The Specific Performance Riddle C. Toward a Pragmatic Conceptualism of Property III. THE REMEDIAL VARIANT: EXCLUSIONARY RELIEF AS A RIGHT A. The Traditional Test and the Right to an Injunction 1. Real Property: Injunctions Restraining Acts of Trespass 2. Injunctions Restraining Patent Infringement B. Unlinking Right and Remedy: Understanding eBay 1. The Automatic Injunction Rule 2. The Supreme Court and the Automatic Injunction 3. The End of Automatic Injunctions: Intellectual Property and Beyond 4. Moving to Efficient Infringement (and Trespass?) CONCLUSION "The notion of property ... consists in the right to exclude others from interference with the more or less free doing with it as one wills."

--Justice Holmes in White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 19 (1908) (concurring).

"The power to exclude has traditionally been considered one of the most treasured strands in an owner's bundle of property rights."

--Justice Marshall in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982).

"[T]he creation of a right [to exclude] is distinct from the provision of remedies for violations of that right."

--Justice Thomas in eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1840 (2006).

INTRODUCTION

What does it mean to speak of property in terms of the "right to exclude"? As a direct consequence of equity's avowed preference for property (over personal) rights in the grant of exclusionary relief, courts and scholars have developed a view that identifies property's right to exclude as meaning little more than an entitlement to injunctive relief against a continuing (or repeated) interference with a resource. This view attributes to the right an entirely consequentialist meaning, under which the right--and indeed all of property--is normatively meaningless except when sought to be enforced in a court of law. If property, as a fundamental social institution, is important outside its remedial context, it is important to identify what the right to exclude means apart from the availability of an injunction. This Article attempts to do this by locating its meaning in the norm of inviolability and the obligation it casts on non-owners to stay away from resources that are owned (and capable of being owned) by someone else.

In his now-legendary formulation, Blackstone defined property as "that sole and despotic dominion ... exercise[d] over the external things ... in total exclusion of the right of any other." (1) Blackstone's definition has since been morphed into a more general definition of property rights in the abstract, centered around the in rem right to exclude. (2) On numerous occasions, in dealing with the issue of takings, the Supreme Court too has characterized the element of exclusion as a critical component of the property ideal. (3)

The idea of exclusion, in one form or the other, tends to inform almost any understanding of property, whether private, public, or community. (4) The only variation tends to be the person or group in whom it is vested. Private property entails vesting it in an individual; public property, in a government or other agency on behalf of a wider set of individuals; and community property, in members of a community against nonmembers. Consequently, the tendency among scholars, courts, and legislators to equate conceptions of property with the notion of exclusion remains pervasive?

Within the exclusionary conception of property, the right-based variant tends to dominate overwhelmingly. A decade ago, Thomas Merrill argued that the "right to exclude" remains the sine qua non of property. (6) The Supreme Court, whenever it invokes the idea, also speaks in terms of a "right" to exclude. (7) Although scholarship and judicial dicta over the years have attempted to understand and apply the exclusionary component of the right to exclude, the debate has tended to ignore altogether the right component. (8) Why is speaking of property in terms of a right to exclude unsurprisingly common? Does the identification of exclusion as a right shed light on its practical significance (as a remedy), or is it merely a rhetorical epithet emphasizing its centrality to the discourse (analogous to the right to life)?

Focusing on the right component of the "right to exclude" is of more than just theoretical value. This focus carries with it a deep functional relevance, one that derives from the interplay between the language of rights and remedies. (9) For quite some time, the right to exclude in the context of both tangible and intangible property has come to be associated with an entitlement to exclusionary (injunctive) relief. Thus, interferences with an owner's interests are thought to entitle the owner to a permanent injunction restraining such interferences. The right to exclude, according to this understanding, is a remedial attribute related to the automatic availability of injunctive relief for interferences with an owner's use and enjoyment of her property.

In eBay Inc. v. MercExchange, L.L.C., (10) however, the Supreme Court effectively unlinked the right to exclude from any entitlement to exclusionary relief. (11) In eBay, the Court concluded that an affirmative finding of validity and infringement did not automatically entitle a patentee to an injunction against the infringer, and held that the traditional four-factor test used by courts of equity determined the availability of an injunction. (12) Put differently (in property terms), the Court concluded that an interference with a property interest, even a continuing interest, does not automatically entitle the owner to an injunction. The owner must still affirmatively establish the inadequacy of ordinary compensatory remedies. The point was driven home most forcefully by Justice Kennedy, who observed in his concurrence that an owner's "right to exclude does not dictate the remedy for a violation of that right." (13)

Almost all analyses of eBay thus far have focused on its impact on patent law (or intellectual property), and have tended to ignore the relevance of the Court's holding for property law more generally. (14) Although the Court's holding was directed specifically at patent injunctions, the express basis of its holding remained the need to subject patent injunctions to the standard governing "other cases" where injunctions were granted. (15) By finding the four-factor test to be the correct standard, the Court implicitly acknowledged its universal applicability to all grants of injunctive relief. Viewed in this light, the eBay decision concluded that a grant of injunctive relief, regardless of context, could never be automatic or ensue as a matter of right.

The eBay decision thus calls into question, rather starkly, the meaning and relevance of the right to exclude, both within the domain of intellectual property and in the wider subjects of real and personal property, at least insofar as each remains premised on the idea of exclusion. If property is no longer automatically associated with exclusionary relief, is it meaningless to continue characterizing the right to exclude as its central attribute? Taking the functional interpretation of the right to exclude as a given, some have readily concluded that the eBay decision heralds the declassification of intellectual property (specifically, patents) as a species of property strictu sensu, or that it dilutes the significance of the right to exclude in understanding intellectual property, and thus all property. (16)

My argument in this Article is very different: I argue that the eBay Court's unlinking of right and remedy in relation to exclusion counterintuitively helps...