Guido Calabresi and Doug Melamed’s 1972 classic “One View of the Cathedral” sets up a framework that is now standard fare for first-year law students. First-years spend their early months trying to figure out what they are doing and why they shuffle from property class to torts class. They hear terminology utterly new to them in those early weeks, including the idea of a “tort” itself.
A potential “ah ha!” moment for a student is figuring out that “property” rules favor full ownership and injunctions where upfront valuation is difficult and transaction costs are low. Tort/contract rules—aka “liability” rules—favor situations with clearer valuation but high transaction costs, like holdout situations. Liability rules break ownership biases in law, allowing the violation of entitlements for the sake of efficiency. They apply damages after-the-fact to settle out the resulting harms. In other words, you eject trespassers from your land, but you get paid when you’re the last holdout blocking a new railroad track. Indeed, both sides can be better off when these rules are used properly.
“One View of the Cathedral” was an “ah ha!” moment for scholars as well. Many professors had long internalized the differences between property and torts. But none had articulated them so simply and intuitively. Nor did most law scholars in 1972 have such a developed sense of the economic tradeoffs present between property and tort-rule regimes. These were the early days of the law & economics movement, after all.
Inalienability: The Overlooked Third Rule Set and Its Use in Copyright
Yet the famous property/liability dichotomy of “One View of the Cathedral” is not the main reason why we are revisiting this great chestnut. It is because Calabresi and Melamed’s work was not a property/tort dichotomy at all: they imagined property rules, liability rules, and inalienability. It is this third category that is underexplored in their work and in scholarship generally.
Our case study for inalienability is 17 USC § 203, the Copyright Act section granting original authors the ability to terminate any “grant or license” of a copyright interest they originally owned. Section 203 generally triggers 35 years after a copyright grant if properly invoked. And § 203(a)(5) states that the termination right exists “notwithstanding any agreement to the contrary,” making the right inalienable for most purposes. Thus, as The New York Times reported in “A Copyright Victory, 35 Years Later,” copyright for the song “YMCA” by the Village People came home to Victor Willis (the Policeman), much to the consternation of a rights company that assumed they would collect royalties for years to come.
Calabresi and Melamed thought inalienability had its place in our legal regime. In particular, they felt that transactions that contain significant costs to third parties, commonly known as externalities, should consider restraints on alienation. Inalienability acts as a sort of ex ante restriction on use of an entitlement. Letting certain entitlements float freely in the transaction system can have all kinds of negative consequences to innocent players. The authors also note the paternalistic and distributional nature of inalienability, but feel it is often justified. Drunkenness and contracts with minors are provided as examples.
Justifications for Inalienability in Copyright
Why would we show such paternalism to authors of copyrighted works? There are differing justifications, but we have a decent idea what Congress thought in the mid-1970s in creating § 203. Congress felt that authors often faced:
- Unequal bargaining power versus publishers/labels; and
- Indefinite valuation for their works ex ante.
J.K. Rowling had no idea what Harry Potter was worth while a nearly homeless single mother fleeing domestic abuse in 1993. She would have taken any deal offered, with no sense of the possible value of her books. Section 203 gives the Rowlings of the world a second bite at the apple.
As you see in the offered readings, both foundational on inalienability from Susan Rose-Ackerman, and specific to §203 from recent writers, restrictions on alienability may not have the distributional effects Congress contemplated. Section 203 likely lowers deal values for all the non-Rowlings of the world for the sake of greater rewards for the authors who hit the market jackpot. Yet even these thinkers are unclear if this is a wholly bad thing. Jackpots can incentivize players all down the line.
Conclusion
Just as Calabresi continues to engage with his “Cathedral” theories at age 93, we might also ask ourselves how to fit entitlements—copyright or otherwise—into modern bargaining dynamics.
Perhaps more restraints on alienability are necessary to manage externalities in areas like online harms, or as a corrective measure to inequality. The tax of lower initial valuations for authors in the copyright context may be worth it as a collective “pay in” to manage uncertainty and get our best authors their due rewards. Or perhaps §203 is an antiquated moralistic barrier to efficient distributions that would make most authors better off. If Calabresi continues to ponder these problems, we should, too.
Further Reading
- Guido Calabresi & A. Douglas Melamed, “Property Rules, Liability Rules, and Inalienability: One View from the Cathedral,” Harvard Law Review, Vol. 85 (1972)
- Susan Rose-Ackerman, “Inalienability and the Theory of Property Rights,” Columbia Law Review, Vol. 85, No. 5 (1985)
- Kate Darling, “Occupy Copyright: A Law & Economic Analysis of U.S. Author Termination Rights,” Buffalo Law Review, Vol. 63, No. 1 (2015)
- Zachary Shufro, “Terminating Copyright,” IDEA – The Law Review of the Franklin Pierce Center for IP, Vol. 63, No. 1 (2023)
- Richard A. Epstein, “Why Restrain Alienation?,” Columbia Law Review, Vol. 85 (1985)
- R. Anthony Reese, “Reflections on the Intellectual Commons: Two Perspectives on Copyright Duration and Reversion,” Stanford Law Review, Vol. 47, No. 4 (1995)
- Peter S. Menell & David Nimmer, “Pooh-poohing Copyright Law’s ‘Inalienable’ Termination Rights,” Journal of the Copyright Society of the U.S.A., Vol. 57 (2009)
- Lionel Bently & Jane C. Ginsburg, “‘The Sole Right… shall Return to the Authors’: Anglo-American Authors’ Reversion Rights from the Statute of Anne to Contemporary U.S. Copyright,” Berkeley Technology Law Journal, Vol. 25 (2010)
- Lydia Pallas Loren, “Renegotiating the Copyright Deal in the Shadow of the ‘Inalienable’ Right to Terminate,” Florida Law Review, Vol. 62, No. 5 (2010)
- Guy A. Rub, “Stronger than Kryptonite? Inalienable Profit-Sharing Schemes in Copyright Law,” Harvard Journal of Law & Technology, Vol. 27, No. 1 (2013)
