The use and abuse of IP at the birth of the administrative state.

AuthorMossoff, Adam
PositionIntellectual property

INTRODUCTION I. MODERN PROPERTY THEORY A. Bundles of Sticks and the Right To Exclude B. The Use of IP To Redefine Property in Land II. THE ABUSE OF IP TO REDEFINE PROPERTY IN LAND A. Lockean Property Theory: Labor, Value, and Property B. Lochean Property Theory and Intellectual Property C. Value and Property: Antecedents and Consequents D. Value and Wealth: Genus and Species III. PROGRESSIVISM, INTELLECTUAL PROPERTY, AND THE ADMINISTRATIVE STATE CONCLUSION INTRODUCTION

Since its inception in the Progressive Era, the modern administrative state has functioned in tandem with the three intellectual property doctrines enforced by the federal government--patent, copyright, and trademark law. Although administrative law and these intellectual property doctrines have shared a common provenance--defined, promulgated, and enforced through federal institutions, statutes, and case law--administrative lawyers did not discuss intellectual property, and intellectual property lawyers similarly did not discuss administrative law. (1) Throughout the twentieth century, administrative law and intellectual property law seemed as if they were hermetically sealed off from each other in both theory and practice.

In recent years, the self-imposed segregation between these two legal regimes has finally broken down. In the 1990s, legal scholars began to explore the doctrinal and institutional relationships between patents and the administrative state, (2) and some patent scholars have since called for a theoretical reframing of patent doctrine "through the lens of regulation." (3) In 1999, the Supreme Court seemed to agree with this growing cadre of academic scholarship, concluding in Dickinson v. Zurko that the Administrative Procedure Act applies to the Federal Circuit's review of the regulations promulgated by the Patent and Trademark Office (PTO). (4) In its March 2009 decision in Tafas v. Doll, the Federal Circuit took another step toward integrating patent law with the administrative state, applying Chevron deference to the PTO's procedural rulemaking. (5) However, the fractured panel decision virtually guarantees further appellate litigation (both a petition for rehearing en banc and a certiorari petition to the Supreme Court). (6) Regardless of the outcome in the appeals process, there will be substantial litigation on remand as well. (7)

Throughout this doctrinal and scholarly tumult at the recently discovered nexus between patents and the administrative state, the conventional wisdom maintains that administrative law and intellectual property law are two separate legal regimes that were born in separate political epochs and that have evolved as distinct doctrines. (8) There is a kernel of truth to this standard story. Unlike patents and copyrights, whose protection under federal law began in 1790, the modern administrative state was born in the Progressive Era. In contrast to the limited functions of the federal government in the early years of the American Republic, such as creating private rights in patents and copyrights under a specific enumerated power in the Constitution. (9) the Progressives took the reigns of government at a time when many people were seeking greater federal involvement in the economic and social conflicts precipitated by the Industrial Revolution. (10) Accordingly, the administrative state first concerned itself with groundbreaking public regulation of industrial and commercial uses of land and chattels, imposing new federal regulatory controls on classic common law entitlements in tangible property rights. (11)

Yet the conventional wisdom is also mistaken, albeit at a more fundamental theoretical level underlying considerations of legal doctrines and institutional design. Although the early administrative state was interested primarily in the regulation of the incidents of tangible property--the functioning of factories and commercial transactions--it achieved this goal on the basis of theoretical work that effected a radical transformation in both constitutional law and property law. The scholars who did the heavy lifting in legal theory to assist the Progressives in crafting the administrative state--legal realists who were committed to the Progressive political agenda--had to reconceptualize the nature of property entitlements as much as they had to reconceptualize the institutional structure and powers of the federal government. (12) As Thomas Merrill and Henry Smith have observed, these legal realists "sought to undermine the notion that property is a natural right, and thereby smooth the way for activist state intervention in regulating and redistributing property." (13)

It has long gone unnoticed, but intellectual property played a key role in the legal realists' innovative property theory, as best exemplified in the work of Felix Cohen and Morris Cohen, and in the work of fellow travelers of legal realism, such as Justice Oliver Wendell Holmes, Jr. In their critique of the natural-rights theory of property, these scholars and jurists reframed property into nominalist and positivist terms. Building on Wesley Hohfeld's conceptual analysis of legal entitlements, (14) they redefined property as a "bundle" of rights with the government's grant of a right to exclude constituting the essential right that defines a legal entitlement as "property."

This work, however, was not a scholastic investigation into the metaphysics of property, an anathema to the pragmatic legal realists. Rather, this conceptual property theory had doctrinal traction for the burgeoning administrative state: it explained that, as long as a property owner retains the right to exclude, the government may regulate the use and disposition of land and chattels without violating any constitutionally protected property right. (15) In reconceiving property rights in this way, the Cohens and other legal realists relied on intellectual property as their primary doctrinal evidence that property is, at its conceptual core, a right to exclude that is positively granted by the government.

This Article uncovers this long-forgotten theoretical nexus between intellectual property and the birth of the administrative state, revealing an important foundational connection between two legal regimes that many modern scholars and courts have assumed were only recently linked in theory and practice. In doing so, it makes several contributions to the current legal disputes and theoretical analyses of the regulatory status of intellectual property doctrines, particularly patent law. First, as a historical matter, it establishes that the administrative state and intellectual property law share an important theoretical pedigree in legal-realist property theory, affirming anew the twentieth-century refrain that "we are all legal realists now." (16) Second, this historical insight reveals that current scholarship advancing a regulatory theory of intellectual property rights has substantial support in the theoretical underpinnings of the administrative state. (17) To propose that intellectual property doctrines, such as patents, serve regulatory policy goals is neither as novel nor as radical as many have assumed it to be. Lastly, and perhaps most importantly, this analysis highlights salient theoretical concerns underlying both the administrative state and modern intellectual property law. In using intellectual property in their critique of the natural-rights theory of property, the legal realists made some basic assumptions about the meaning of "labor" and "value," which are central concepts in the natural-rights theory of property. Yet, in important respects, the legal realists defined these terms differently from the natural rights philosophers. In other words, the legal realists failed to critique the property theory of the natural rights philosophers, such as John Locke, and the American jurists and lawyers who translated this theory into practice. (18) This oversight suggests that the legal realists' theoretical work on property may not have been as successful as the conventional wisdom assumes today.

This Article proceeds in three Parts. First, it explains how the legal realists reconceptualized property into both nominalist and positivist terms--as a bundle of sticks with the state's grant of a right to exclude as the single essential characteristic that defines this legal entitlement as "property." It then discusses the legal realists' justification for this new conception of property, detailing for the first time the exact arguments and evidence used by Felix Cohen and other legal realists to advance their nominalist-positivist property theory. (19) This argument consists primarily of a critique of the labor-based natural-rights theory of property, which, for ease of reference, this Article will refer to as "Lockean property theory." (20)

Second, this Article will discuss how the legal realists' critique of Lockean property theory falls short of its target insofar as it elides an important distinction between value and economic value (i.e., wealth). The balance of Part II will explicate the distinction between these different senses of value and the role that property plays in both defining and securing value to its creators, as set forth in chapter five of John Locke's Second Treatise. (21) This Part will follow the lead of Felix Cohen and his fellow legal realists in using intellectual property rights, such as trademarks, trade secrets, and patents, to illustrate how the legal realists failed to critique Lockean property theory on its own terms.

Third, and last, this Article will discuss the recent scholarly efforts to reframe intellectual property rights as regulatory entitlements within the administrative state, revealing how these scholars are replicating, unconsciously or otherwise, the theoretical work of early-twentieth-century Progressives and legal realists. This intellectual history is important because it cautions...

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