Gideon Parchomovsky

The Value of Giving Away Secrets

This Essay demonstrates the strategic advantage of narrow patents and unprotected publication of RD that between the two main theoretic strands in patent law scholarship - the property rights perspective and the information revelation perspective. It also explains the recent trend toward unprotected publication of information. Finally, we propose an important reform of the novelty requirement in patent law that would further encourage narrow patents and unprotected publication by bolstering the credibility of a patentees commitment not to patent previously published research findings.

A Theory of Property

Property law has eluded both a consistent definition and a unified conceptual framework. Instrumentalists insist that property is nothing more than default contract rules. Conceptualists proclaim the primacy of in rem conceptualization and of specially privileged rights such as the rights to exclude. Others think of property as an infinitely malleable “bundle of sticks.” We demonstrate that any comprehensive property theory must address four legal questions: (1) What things are protected by property law; (2) vis-a-vis whom; (3) with what rights; and (4) enforced by what mechanism. Then, we introduce a value-oriented theory to show how property law answers these questions by recognizing and helping to create stable relationships between persons and assets, allowing owners to extract otherwise unavailable utility. Our approach illuminates recent property developments, and demonstrates the need for reform. Additionally, we demonstrate the need for property occasionally to yield to other legal fields like secured transactions. ∗ Visiting Associate Professor, Fordham University Law School; Lecturer, Bar Ilan University Faculty of Law. ∗∗ Assistant Professor, University of Pennsylvania Law School. This Article greatly benefited from comments and criticisms by Oren Bar-Gill, Susan Block-Lieb, Bob Ellickson, Abner Greene, Assaf Hamdani, Eugene Kontorovich, Brian Lenhard, Jide Nzelibe, Russell Pearce, Eduardo Penalver, Dan Richman, Chris Serkin, Peter Siegelman, Henry Smith, Linda Sugin, Steve Thel, Bill Treanor, Ben Zipursky, and participants in the Fordham University Law School Faculty Workshop. Peter Huh, Sean McEldowney, Drew Norman and Kara Siegel provided outstanding research assistance.

Selling Mayberry: Communities and Individuals in Law and Economics

The small village of Cheshire, Ohio was recently acquired in its entirety by the firm whose giant power plant, located at the edge of town, caused it serious pollution problems. Although the plant was worth substantially more than the town, this was not a simple Coasean bargain. This paper combines an ethnographic methodology with theoretical insights from law and economics to present an empirical and theoretic challenge to the standard account of nuisance disputes. We explore the transaction in detail and explain what prevented collective action and holdout problems that are usually thought to hinder bargaining with groups. Specifically, we show how incorporating the role of community into conventional theory offers a new understanding of the likelihood of holdouts, the importance of community dynamics, the interdependency of community-wide nuisance actions, and the role of the law of takings.

Reconfiguring Property in Three Dimensions

In this Article, we demonstrate that every property question invariably involves three distinct dimensions: (1) the number of owners, (2) the scope of owners dominion and (3) asset configuration. Furthermore, we claim that the interplay among the three dimensions shapes the field of property and holds the key to understanding the deep structure of property law. On this view, property law is a balancing act that requires policymakers and private actors to constantly juggle the often-conflicting demands lying along these three dimensions.The three-dimensional account of property we develop in this Article has important descriptive and normative implications. Descriptively, we show that property law accommodates conflicts by using as many as six different strategies to maximize efficiency over the three dimensions. Furthermore, we demonstrate that all property doctrines fall under one of the six strategies we enumerate. Accordingly, the Article offers a coherent and comprehensive descriptive account of the field.Normatively, our three-dimensional approach offers a wide array of new policy responses to property challenges. It suggests that every property challenge may be addressed on any one (or more) of the three dimensions. This opens the door to new proposals for resolving such diverse long standing property challenges as managing property rights in tribal land and conservation properties, optimizing access to coastal land, and regulating environmental liability and intellectual property.

Of Property and Anti-Property

In this Article, we introduce the concept of anti-property - a private conservation mechanism that allows only socially desirable development. Our mechanism utilizes veto rights to create a collective holdout dynamic that thwarts undesirable uses of conservation commons. We demonstrate, counterintuitively, that when transaction costs systematically bias the market against conservation, the best response may be to create countervailing transaction costs. We also show how the combination of a private anti-property mechanism with a carefully designed takings law may result in an optimal balance between conservation and development.

The Evolution of Private and Open Access Property

In this Article we explore the evolution of property law and examine the applicability of the prevailing accounts according to which property institutions oscillate between the extreme points of open access and private property. We show that the evolution of property is a much more nuanced process, shaped by the interplay of the following three dimensions: number of owners, extent of dominion and asset configuration. Accordingly, property institutions can assume a myriad of positions along the aforementioned dimensions in response to the constant change in exclusion and management costs. We demonstrate our theory by discussing examples of three dimensional adjustments of real, personal and intellectual property.

The Hidden Function of Takings Compensation

To date, scholars have justified the constitutional mandate to pay compensation for takings of property on the intuitively appealing grounds that fairness demands recompensing aggrieved owners; on the basis of a belief that government that fails to pay will suffer from “fiscal illusion” and take excessively; or due to the need to neutralize politically powerful property owners who would otherwise foil socially beneficial projects. This Essay offers a new explanation of the role of takings compensation in ensuring good government. Inspired by public choice theory, we argue that takings compensation reduces the incentives for corruption by limiting corrupt politicians’ ability to profit from takings. Specifically, we show that mandating compensation reduces the funds self-serving politicians can extort from property owners. At the same time, mandating compensation permits publicly-oriented politicians to continue pursuing socially beneficial projects.This explanation yields important insights into the optimal structure of takings compensation. First, current incentives to use eminent domain excessively in the service of private developers cannot be blunted by modifying compensation policy. Only by a separate policy that charges developers for the benefits they receive can reduce or eliminate such misuse of the taking power. Second, overcompensation is even worse than under-compensation insofar as corruption is concerned. For this reason, laws requiring the payment of fixed percentage bonus above market value to property condemnees are in error. Additionally, where judges are thought systematically to overrate the subjective value owners attach to their properties, market value compensation may have some merit. Third, public compensation cannot be replaced by a private insurance system, even if such insurance were practical, since insurance too would encourage corruption.

Property Lost in Translation

In this Essay, we explore the phenomenon of localized property systems and the interactions of such localized property systems with property law. Our Essay aims to provide the beginnings of an exploration of localized property systems and translation problems, rather than a complete survey. In our exploration, we look both at the local systems themselves, and at their implications for our broader understanding of the world of property. We begin by showing the ubiquity of localized property systems. Some appear quite exotic, such as the informal property rights in favelas in Brazil, collective property rights in kibbutzim in Israel, or even virtual property rights in computer games. Others localized property systems are quite mundane, such as the quasi-property rights in urban parking spaces, or the agreed-upon property arrangements among roommates. In all events, localized property systems serve some need of the localized property users. The localized systems may be due to lower transaction costs thanks to ongoing relationships (roommates), ideological preferences (kibbutzim), flaws in property law or its satellite regulatory systems (favelas) or a variety of other reasons. Whatever the reasons for the localized property systems, they are not costless. All localized property systems entail translation costs with the wider state property systems around them. Translation costs result from incompatibilities, as well as information and enforcement costs. One way of understand the phenomenon of localized property systems is through the economics of network effects. Property law systems, like other legal systems, have greater utility with greater numbers of adherents. These network effects, and the translation costs entailed in using localized property systems, create pressure for localized property systems to converge with the larger state property systems around them. But pressures for convergence may be resisted. Convergence is itself costly. The costs of transitioning may bar convergence, or the continued utility of the localized property system may render convergence not cost-effective. Additionally, politics may block efficacious convergences of property systems. One potential insight stemming from our analysis is in the theory of commons property: translation costs must be taken into account when examining collective action solutions to tragedies of the commons.

Intellectual Property Law and the Boundaries of the Firm

Arrows disclosure paradox implies that information that is not afforded legal protection cannot be bought or sold on the market. This paper emphasizes the important relationship between the paradox of disclosure and the boundaries of the firm question. Only legally protected inventions, i.e., patented inventions, may be traded; pre-patent stages of the innovation process may not. Consequently, by force of law, rather than by the guidance of economic principle, pre-patent innovation must be carried out within the boundaries of a single firm.

Fair Use, Efficiency, and Corrective Justice

The fair use doctrine is at once the most significant and the most problematic qualification of the copyright owners right to exclusivity. An affirmative defense against copyright liability, the fair use doctrine legitimates certain unauthorized reproductions of copyrighted materials that would otherwise be regarded as copyright infringements. Notwithstanding its importance, “fair use” continues to be “the most troublesome [doctrine] in the whole law of copyright.” Throughout its long history, neither courts nor legislatures have provided a useful definition of “fair use” nor have they adumbrated its objectjves. Since the doctrines inception over two and a half centuries ago, courts and legislatures have attempted to formulate, explicate, refine, and revamp the fair use doctrine. Generally, these efforts have proven unfruitful. At best, they have resulted in various formulations of how to approach fair use questions that offer courts and users of copyrighted works scant guidance on how fair use should be recognized. All this would not have been of grave concern had judges shared a common understanding of fair use or of the principles that should guide them in deciding fair use cases. The problem is that they do not. Rather, the case law reflects wdely divergent notions of the concept of fair use. The lack of consensus is best witnessed in the multiple reversals and divided courts that have become the hallmark of fair use litigation.