I’m sypathetic to the conclusion, but I don’t buy the premise. How is a typical lease of a car a “physical transfer pursuant to limited conditions that constrain the operator’s use”? If I lease a car, I have to live with the rules of the road, but unless I make a special agreement with the lessor, I can do anything else with the car that I like – subject to the physical limitations inherent in the automobile. The lessor has no “privileges” that it “cedes” to me. With occasional exceptions, property law has enforced the no-equitable-servitudes-on-chattels principle pretty consistent for a long time. Some people (Glen Robinson) argue that the enforceability of software licensing shows that this isn’t so, but I think that the argument has its propositions backward. If software licensing is inconsistent with the principle barring equitable servitudes on chattels, then software licensing may (emphasis on “may”) be illegitimate. It doesn’t show that the principle has no force.

In other words, “basic property principles” aren’t necessarily so basic. If you separate the use-right clearly from the chattel-right, then it’s easy and I think right to get the result that you offer in the apple case. So, conceptually, the second part of your argument seems unremarkable. “The right to pick my apples” is clearly something that can be alienated by gift, or contract, or something else. But in the minds and experiences of the donees, that “right” is clearly and easily distinguished from any item of chattel property. The apples themselves unambigously belong first to the donor, and later to the donee.

To make it closer to the CD example, suppose that the apple picking “gift” takes the following form: “I give you the right to pick apples from my orchard, provided that you use the apples only to make pies that don’t compete with my own pies.” The donee picks and bakes and competes. The donor sues for trespass to chattel (violation of the property right to exclude) and conversion (mis-appropriation of the apples). Now the “use” restriction is much more clearly tied to the chattel itself, and in the absence of (i) assent by the “donee” or (ii) some physical detail of the apple that makes baking difficult or impossible, “basic property law” is suspicious of the constraint, and reluctant to uphold the donor’s trespass and conversion claims — if the claim goes to an absolute property right. (In my view, ambiguity about whether use-rights or chattel-rights or some combination of the two is involved is why the trespass-to-website claims are so controversial.) The apples themselves are either gifts or they’re not; the donor cannot have them back, or stop the baking. By long-standing tradition (supported, if one likes, by plausible economic arguments as well as by sensible psychological and sociological ones) the donor’s interest ends, and the donee’s interest takes over, at the moment of physical transfer.

That doesn’t necessarily leave the donor apple grower out of luck. A different way to slice the problem, and perhaps a better one, is to enforce the use-restriction on liability grounds but not enforce the chattel-restriction as a property rule. If the apple-picker bakes and competes in violation of the restrictive gift, the remedy may be damages for violation of the use right, but no injunction against reuse of the apples.

Bringing this full circle: There is no property right against re-sale of CDs, whether those are gifts or commercial sales in the first place, but producers have a case for compensation. The law might give them an unfair competition remedy in damages, or it might plausibly say that producers can fix their revenue problems by managing prices differently, or by manufacturing their products so as to clearly differentiate non-reusable/re-salable “things” from other “things.”

Mike

Mike

Seems that the CD example is the same. We have straightforward sales, and then we have licensing agreements where the owner retains control but cedes certain use privileges to users. Sure, the promotional-CD context is a bit different because it involves a gift, but I’m not sure why the lack of consideration changes the equation (save for making property rather than K principles apply). Why shouldn’t parties be able to make donative transfers of use rights (presuming they comply with relevant notice-generating formalities)? E.g., “I gift to you the right to pick apples from my orchard.”

This isn’t to say that objections to shrink- or click- or browse-wrap agreements on contract, UCC, or preemption grounds aren’t good reasons to resist the enforceability of these agreements, but I don’t see why the license terms are conceptually problematic from the perspective of basic property principles.

As for the Schroeder and AAP statements, Fred’s a great advocate. Which is why I’d want to see those quotes in context before drawing any conclusions.