Just noticed, via Tim Zinnecker at The Faculty Lounge:
In re Erving Industries, Inc., a Bankruptcy Court opinion from last Spring in which the court considers whether the sale of “electricity” involved the sale of a “good” for UCC and therefore Bankruptcy Code purposes.
Once again, the legal thingness of arguably physical things raises its attractive head!
[T]his Court discerns a marked difference between electricity and television, radio, telephone, and internet signals (“telecommunication signals”). Although their manifestations may appear similar, they are differentiated by both their physical attributes and the purposes for which they are purchased. Telecommunication signals are properly considered services because they are mechanisms by which other non-goods â€” intellectual property, ideas, sounds, music, images, and words â€” are sent from one location to another. Electricity, in contrast, is not merely a medium of delivery, but is the thing the customer seeks to purchase. Customers paying for telecommunication signals may, on the whole, be fairly unconcerned with the physical properties or mechanics of the telecommunications signals, except to the extent that those physical properties enhance the delivery of information. On the other hand, electricity customers are undoubtedly concerned with the intimate physical properties of electricity. That is, customers rely on the specific physical properties of electricity to fulfill their needs â€” anything deviating from those properties simply will not do. And it is those physical properties, the very nature of electricity, that customers contract to purchase.
The Court agrees with NewEnergy that, although its ultimate nature may be mystifying to most, electricity is tangible and does possess physical properties. It is not simply an “idea” akin to intellectual property. Although perhaps lacking in corporeal shape and not easily observed, electricity really is some thing, something that can be felt (although we are loathe to) and something that can be created, measured and stored.
This reasoning strikes me as deeply, even profoundly, confused.Â Aren’t telecommunications signals, like “electricity,” forms of electromagnetic energy?Â Is music, transmitted by wire, somehow separable in physical terms — which is what the court seemed to be concerned with — from the electromagnetic signals that “carry” the music?Â Don’t actual forms of IP possess genuine “thing-ness” (i.e., discreteness) that electricity, on my layman’s understanding, lacks?Â I’ll overlook the court’s upside-down description of IP as such.
Resolved, in light of Erving:Â All copyright and patent transactions are subject to Article 2 of the UCC, for they involve subject matter that can be felt, created, measured, and stored.
No, they’re right.
“Donâ€™t actual forms of IP possess genuine â€œthing-nessâ€ (i.e., discreteness) that electricity, on my laymanâ€™s understanding, lacks?”
The way to see the difference, is that electricity exists independent of the court system :-). Isn’t the difference between the *physical object*, and the *IP abstraction*, pounded into people? Nobody can pass a meaningful law saying that electricity will henceforth exist for 20 more years.
> Arenâ€™t telecommunications signals, like â€œelectricity,â€ forms of electromagnetic energy?
Think of “writing” as bits of ink. But “ink” is still a good.
I agree on just about all points, but the concept of a “good” for UCC (i.e., legal) purposes is just as much a creature of law as a copyright or a “work of authorship” or a book. Nb. all three of those things are creatures of law, even the last. The printer manufactures a thing that we call a book, and which is a good in UCC terms, and it exists independent of the legal system in a sense. But the legal system has to declare it a “book” in some meaningful sense in order to distinguish it from other things — electronic things, for example — that are sometimes called books.
In other words, electricity has a physics and physicality that has nothing to do with law. But it would be odd for that fact, alone, to make it a “good.” In a lot of legal settings, physical existence isn’t the sine qua non of “good”ness. Ink isn’t a good; a bottle (or any other container) of ink is. The legal system might declare that electricity is a good because the ideas behind the UCC are the ideas that we want to apply to electricity supply deals. IP “goods” are usually not “goods” not just because they lack physicality but also because we don’t want UCC rules to apply to licenses and assignments.
I always think of a passage from Ray Nimmer’s computer law treatise where he talks about the impetus in the early 20th century to create a new “field” of law called “the law of electricity” and likens this impulse to the late 20th century debates about whether there is any such thing as “computer law” or “Internet law”. He makes some interesting comments about the analogy between the two – although I appreciate that mike is really making an analogy with IP rather than computer/Internet law.