The Public Contract Basis of Intellectual Property Rights
by
Randolph J. May * and Seth L. Cooper **
[Below is the Introduction to this latest FSF Perspectives. A PDF version of the complete
Introduction and Summary
Property rights and contracts rights share an inseparable connection in American constitutionalism. One of the basic premises of America's constitutional order is that all people have a natural right to keep, use, and enjoy the fruits of their labors. We call those fruits property, whether the labors result in the creation of tangible physical objects or non-tangible ones like writings or inventions.
The Constitution's Article I, Section 8 Intellectual Property Clause grants to Congress the power "To Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." It was a background assumption of the Founders that copyrights and patent rights secured by the Constitution were property rights ultimately rooted in the natural rights of authors and inventors to the fruits of their labors. This proposition, which remains as relevant in today's Digital Age as it was at the time of the Constitution's adoption, was at the core of our book, The Constitutional Foundations of Intellectual Property: A Natural Rights Perspective (2015).
A person's natural right to property also includes a natural right to assign it or exchange it by contract. Indeed, the Founders also believed that individuals have a natural right to establish governments by their consent through a special type of political contract commonly known as a social compact. Governments are thereby formed to protect individuals' natural rights, including their rights in private property. The Founders' contractarian understanding of government's origin and its duties in securing individuals' natural rights shaped early American law of property and contract. Importantly, this contractarian understanding was brought to bear on the law of patents and copyrights in a way that remains relevant today.
In this view, patent rights and copyrights are secured by a contract between the federal government, on the one hand, and inventors and creative artists, on the other. Beginning in early America and continuing through the early 20th century, this public contract or social compact basis for intellectual property protection has been observed in numerous judicial opinions and legal treatises.
The constitutional jurisprudence of Chief Justice Marshall exemplifies the social compact basis of government and the sanctity of contracts. The Supreme Court's decision in Trustees of Dartmouth College v. Woodward (1819) rooted copyright protection in notions of a public contract between the federal government and the author. Marshall wrote that in exchange for "the advancement to literature" that results from inducing authorship and publication, the author receives copyright protection in his or her work.
More forthrightly, Marshall's opinion in Grant v. Raymond (1832) articulated the public contract basis of patent grants:
It is the reward stipulated for the advantages derived by the public for the exertions of the individual, and is intended as a stimulus to those exertions. The laws which are passed to give effect to this purpose ought, we think, to be construed in the spirit in which they have been made; and to execute the contract fairly on the part of the United States, where the full benefit has been actually received.
According to Marshall, where "the communication of the discovery to the public has been made in pursuance of law, with the intent to exercise a privilege which is the consideration paid by the public for the future use of the machine," then "the public faith is pledged" to protect an inventor's exclusive enjoyment of his patent rights. From the contractarian premises articulated by Marshall, it follows that specification or description of an invention in a patent application is essential to proper tendering of consideration and to establishing the scope of the bargained-for protection.
Over the ensuing decades, the contractual nature of patent rights was reaffirmed by a number of jurists and legal treatise writers. In a handful of patent cases decided in the middle to late 19th century, the Supreme Court cited and quoted from Marshall's description of patents as contracts between the applicant inventor and the federal government. A number of subsequent Supreme Court cases also reinforced the public contract premise of Grant v. Raymond in somewhat different phraseology or emphasized different elements of the public contract concept.
The public contract basis of copyrights has been articulated with much less frequency and less clearly than is the case with patents rights. Yet both copyrights and patent rights receive protection pursuant to public contracts between creative artists and inventors and the federal government, acting on behalf of the people.
In the case of copyright, registration of the creative work constitutes the valuable consideration given to the public. The creative artist - whether an author, music recording artist, or motion picture studio - enjoys, for a period of time, exclusive rights concerning the use and reproduction of the creative work. The public receives the benefits resulting from creative artists' pursuit and production of such works. In exchange, as economic inducements to undertake the intellectual labors necessary to produce such works, copyright law secures to the creative artists' exclusive rights to financial returns and rewards from the production of creative works.
Some scholars have wrongly inferred from the public contract concepts that IP rights do not rest on natural rights premises but instead simply reflect government policy preferences about what is useful to the public. That is an impoverished view concerning the relationship between contracts and IP rights. In truth, principles of contract, reflected in both the social compact theory and in public contracts, form a continuous link between natural rights and intellectual property protections. The contract basis for IP rights, as an embodiment of natural rights principles, reinforces the just claims of inventors and creative artists to protections for their vested property interests in the fruits of their labors.
Plainly, the IP Clause's grant of power to Congress "To Promote the Progress of Science and useful Arts" expresses a Congressional duty to the public. But in Federalist No. 43, James Madison regarded "[t]he copyright of authors" or "the right of useful invention" as beneficial to the public, not at odds with it. As Madison wrote concerning the rights secured by the IP Clause, "[t]he public good fully coincides in both cases with the claims of individuals."Yet even if one believes the primary interest of the Intellectual Property Clause is directed toward the public good - which is not our view - its secondary interest in securing individuals' patent rights and copyrights is nonetheless rooted in natural rights of property and contract. Protection for the exclusive intellectual property rights of inventors and creative artists therefore deserve what Marshall, in Grant v. Raymond, called "the faithful execution of the solemn promise made by the United States." This is no less true today than when Marshall wrote those words in 1832.
* Randolph J. May is President of the Free State Foundation, an independent, nonpartisan free market-oriented think tank located in Rockville, Maryland.
** Seth L. Cooper is a Senior Fellow of the Free State Foundation.
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