What the Constitution Giveth, Texas May Taketh Away

May 10, 2022 In Blog, Copyright, Court System, Intellectual Property, United States Supreme Court By Mark Brodt

“You May All Go to Hell, and I Will Go to Texas”^[1] – Davy Crockett

On March 21, 2022, the United States Supreme Court denied certiorari to Jim Olive, who was seeking review of a decision from the Supreme Court of Texas, dismissing his case which had alleged a federal takings claim against the University of Houston for its unauthorized use of a photograph Olive had taken.^[2] This denial may have sounded the death knell of any possibility of ever holding a state liable for patent or copyright infringement.^[3] It has been well established that states are protected by sovereign immunity under the Eleventh Amendment from suits directly alleging infringement,^[4] and even a 1990 Act of Congress designed to address the matter never succeeded in holding states accountable,^[5] finally drawing its last unconstitutional breath in the Supreme Court in 2020.^[6] To avoid this immunity pitfall, Mr. Olive did not allege a direct copyright infringement claim, but instead pleaded a takings claim under the Fifth Amendment.^[7]

The Fifth Amendment provides that “private property [shall not] be taken for public use[,]^[8] without just compensation.”^[9] The typical justification given is that government should not require “some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”^[10] However, not every deprivation of property is considered a taking.^[11] The most traditional taking under the Fifth Amendment – a condemnation action – occurs when the government acquires legal title to land.^[12] But currently, the more common application is the so-called “inverse condemnation,” where government action or regulation deprives an owner of significant value in his property.^[13] For these cases, the Court applies a multifactor balancing test to determine if a taking has occurred,^[14] but there are two notable exceptions that constitute a “per se” taking and automatically require just compensation: (1) a regulation that “deprive[s] a landowner of all economically beneficial uses,”^[15] and – the type Olive alleged here – (2) a permanent occupation of property.^[16]

Olive reasoned that the University’s appropriation deprived him of the exclusive right to control his work, and that the loss of that exclusivity – the core component of a copyright – is a complete per se taking.^[17] Furthermore, he argued, a copyright holder has the exclusive right to create as many or as few reproductions as he desires, and thus any unauthorized reproduction of Olive’s work constitutes a complete “occupation” of that reproduction.^[18] The court, however, was unpersuaded. Because Olive could still continue to reproduce his work and control its use by other non-government parties, the University’s appropriation could not be considered a “permanent occupation.”^[19]

The Texas Court relied heavily on the principle that this unauthorized “temporary” use was akin to a “transitory common law trespass” that would not amount to a taking.^[20] Just like a landowner maintains overall control and use of his real property while suffering trespassers, Olive “retains the key legal rights despite the government’s interference.”^[21] But, in fact, days after the Texas’s Court ruling, the U.S. Supreme Court issued its decision in Cedar Point Nursery v. Hassid, holding that the right to exclude from real property was a “fundamental element of the property right,”^[22] and that the government’s transitory appropriation of the right to access land was a “physical occupation” and thus a per se taking.^[23] This would seem to directly dispute the Texas Court’s assertion that the temporary deprivation of exclusionary rights would not be considered a per se taking.^[24] Whether the current Supreme Court was ready to hold states liable for intellectual property infringement is questionable, but with the Supreme Court denying certiorari at what, presumably, was the most opportune time for such a case to be heard, states remain free and protected for the foreseeable future.

But, in fact, the Supreme Court has already directly spoken on the efficacy of taking claims for governmental patent infringement. In an 1881 case mostly forgotten by modern courts and academics, the Supreme Court in James v. Campbell stated that a patent “confers upon the patentee an exclusive property in the patented invention which cannot be appropriated or used by the government itself, without just compensation, any more than it can appropriate or use without compensation land which has been patented to a private purchaser.”^[25] Indeed, many patents – such as ones designed for the military – rely exclusively on government use, and technological advancement in those areas would cease if the government could seize such inventions wholesale.^[26] And there can be no logical distinction between Campbell’s patent rule and a copyrighted work of art.^[27] It would be imprudent and unfair for a court to conduct an ad hoc hearing to determine the relative value of every private intellectual pursuit and find a taking only when it is of the sort that is useful only to the government. As Justice Holmes famously declared, “It would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of pictorial illustrations.”^[28]

After Cedar Point, and the Supreme Court’s determination that the right to exclude is fundamental to property,^[29] a return to Campbell is warranted and necessary. If the temporary deprivation of the right to exclude from real property, where other fundamental property rights surely exist, constitutes a per se taking, then a fortiori, where exclusionary rights are indeed the only tangible way to maintain one’s intangible intellectual property, a taking must be found where the government intrudes on that right.

Perhaps more important, the underlying rationale for the Texas Court’s decision is fundamentally erroneous. The court reasoned that because “copyright is nonrivalrous, meaning that another person can use it without simultaneously depriving anyone else of its use, . . . [infringement] does not equate to the theft or conversion of the copyright owner’s exclusive rights.”^[30] This may be facially sensible, but peel away the veneer of wisdom and the flaw is readily visible. It is unquestionably true that an infringement of intellectual property does not preclude the owner from its continued use in the way that theft of chattel or the invasion of real property does.^[31] But the core – in fact, the only – property interest in any copyright is the ethereal “exclusive right to reproduce, adapt, distribute, perform, and display the work.”^[32] It is bizarre and, indeed, counterintuitive, to maintain that the Fifth Amendment demands a “permanent physical occupation”^[33] on property that is itself metaphysical. The Constitution could not rationally have specifically granted rights to intangible property^[34] but intended the Bill of Rights to apply only to the tangible.

Indeed, it is well established, and the Texas Court readily concedes,^[35] that intellectual property, like all other property, is protected by the Due Process Clause of the Fifth Amendment.^[36] But the Texas Court, by determining that a State must fully deprive a copyright holder of all control and possible benefit of his copyright – an improbable, if not implausible, circumstance – effectively reduces the Takings Clause to nothing more than a “parchment guarantee,”^[37] running afoul of the Supreme Court’s command against rendering Constitutional language irrelevant.^[38] With Congress’s hands evidently tied,^[39] and the States’ refusal to relinquish sovereignty or recognize intellectual property takings unlikely to shift, the Supreme Court is the only body that can right this wrong. Hey, there’s always next term.^[40]

Footnotes[+]

Footnotes
1	Davy Crockett, Statement made during his 1835 Re-Election Campaign for the Twelfth Congressional District of Tennessee, in Niles Wkly. Reg., April 9, 1836, at 99.
2	Jim Olive Photography v. Univ. of Houston Sys., 142 S.Ct. 1361 (2022).
3	See Shuba Ghosh, Toward a Theory of Regulatory Takings for Intellectual Property: The Path Left Open After College Savings v. Florida Prepaid, 37 San Diego L. Rev. 637, 708 (2000) (arguing that the Supreme Court has improperly allowed States to seize private copyright and patent rights without offering just compensation).
4	See Fla. Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav. Bank, 527 U.S. 627, 635–47 (1999) (holding the Patent and Plant Variety Protection Remedy Clarification Act, which explicitly abrogated state sovereign immunity with respect to state infringement on private patents, was unconstitutional under the Eleventh Amendment).
5	A string of lower court decisions had applied Florida Prepaid’s patent holding to the identical copyright provision in the Copyright Remedy Clarification Act (“CRCA” or “Act”), finding it unconstitutional, without a single plaintiff ever succeeding in any court under the Act. See, e.g., Rodriguez v. Texas Comm’n on the Arts, 199 F.3d 279, 281 (5th Cir. 2000); Wolf v. Oakland Univ., No. 15-cv-13560, 2016 U.S. Dist. LEXIS 167268 at 8–9 (E.D. Mich. Dec. 5, 2016); InfoMath, Inc. v. Univ. of Ark.*, 633 F. Supp. 2d 674, 679 (E.D. Ark. 2007).
6	Allen v. Cooper, 140 S. Ct. 994, 999 (2020) (holding that Florida Prepaid compelled the same result when applied to the CRCA because Congress had no constitutional right to abrogate state sovereign immunity).
7	Jim Olive Photography v. Univ. of Houston Sys., 624 S.W.3d 764, 768 (Tex. 2021).
8	This often-missing comma may in fact be crucial to takings clause jurisprudence. The original text seems to contain no commas in the clause, meaning the phrase “for public use” does not constrain the ability of the government to take, but rather limits the takings clause to takings that are for public use. If not done for the public – that is, not a case of eminent domain, but rather a “private” governmental use, such as this unauthorized use by the University of Houston – just compensation would not be required. For a more detailed discussion see The Kelo Decision: Investigating Takings of Homes and other Private Property: Hearing Before the S. Comm. on the Judiciary (2005) (testimony of Thomas A. Merrill) (“[‘For public use’] does not necessarily mean that the Clause imposes an affirmative requirement that a taking must be for a ‘public use.’ It is also possible that the Framers were simply describing the type of taking for which just compensation must be given – a taking of property by eminent domain as opposed to some other type of taking, such as a taking by tort or taxation.”); see also, The West Wing: Institutional Memory (Season 7, Episode 21 Timestamp: 34:22) (Warner Bros. Television production May 7, 2006).
9	U.S. Const. amend. V.
10	Armstrong v. United States, 364 U.S. 40, 49 (1960).
11	See, e.g., Penn. Coal Co. v. Mahon, 260 U.S. 393, 413 (“Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law. As long recognized, some values are enjoyed under an implied limitation and must yield to the police power.”).
12	See, e.g., Kohl v. United States, 91 U.S. 367 (1875).
13	See, e.g., Palazzolo v. Rhode Island, 533 U.S. 606, 616 (2001).
14	Penn Central Transp. Co. v. N.Y.C., 438 U.S. 104, 124 (1978) (The three relevant factors are (1) the “economic impact of the regulation,” (2) the “extent to which the regulation has interfered with distinct investment-backed expectations,” and (3) “the character of the governmental action.”).
15	Lucas v. S. C. Coastal Council, 505 U.S. 1003, 1018 (1992). The Court limited this rule to real property, explicitly excluding personal property which includes intellectual property. See id., at 1027–28.
16	Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426 (1982).
17	Olive, 624 S.W.3d at 775.
18	Id. at 772.
19	Id. at 774 (“In a per se taking, the government’s appropriation of property means the property was actually occupied or taken away from the owner. It is an actual taking of possession and control by the government. But an act of copyright infringement by the government does not take possession or control of, or occupy, the copyright.”) (internal quotes omitted).
20	Id. at 769.
21	Id. at 775.
22	141 S. Ct. 2063, 2072 (2021).
23	Id.at 2074. The Court held that a California regulation granting labor organizations access to an agricultural employer’s land for three hours a day, 120 days a year, in order to solicit support for unionization, constituted a per se physical taking.
24	Id. at 2072. The Court called the right to exclude “one of the most essential sticks in the bundle of rights that are commonly characterized as property.” Using this precise turn of phrase, the Texas court characterized Olive’s claim: “Olive argues that . . . the University deprived [him] of his exclusive right to control his work, thus depriving [him] of the most important stick in his bundle of rights.” See Olive, 624 S.W.3d at 776. The court continued to speak in farming terms as it tried to distinguish the right to exclude from other, supposedly more essential, rights: “[W]here a [copyright] owner possesses a full ‘bundle’ of property rights, the destruction of one ‘strand’ of the bundle is not a taking . . . but with a physical appropriation of property, the government does not simply take a single ‘strand’ from the ‘bundle’ of property rights: it chops through the bundle, taking a slice of every strand.” Id. at 775 (internal quotes omitted). It should now be manifestly clear that the Court in Cedar Point has declared that the right to exclude is not but one measly strand in the bundle of property rights, rather it is “the sine qua non of property” and its deprivation is not tolerated by the Fifth Amendment any more than when a highway is built in one’s backyard. See 141 S. Ct. at 2073.
25	104 U.S. 356, 358 (1881). C.f., Paul J. Heald & Michael L. Wells, Remedies for the Misappropriation of Intellectual Property by State and Municipal Governments Before and After Seminole Tribe: The Eleventh Amendment and Other Immunity Doctrines , 55 Wash & Lee L. Rev. 849, 869–70 (arguing that takings claims, under Campbell, are the best method by which to hold the government liable for misappropriation of intellectual property). And only seven years ago, the Court in Horne v. Dep’t of Agric. cited Campbell, but only as proof that “personal property [is not] any less protected against physical appropriation than real property.” 576 U.S. 351, 359 (2015).
26	See Campbell, 104 U.S. at 358.
27	Indeed, the Supreme Court has ruled that a takings claim is valid even on the weakest of all intellectual property – trade secrets. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1003–04 (1984).
28	Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 251 (1903).
29	See supra notes 21–22 and accompanying text.
30	Olive, 624 S.W.3d at 776-77 (internal quotes omitted).
31	This proposition needs no citation, but if the reader desires sources, the Bible mentions the theft of oxen and sheep. Exodus 21.37. C.f., Dr. Seuss, How the Grinch Stole Christmas (1957).
32	Copyright, Black’s Law Dictionary (10th ed. 2014).
33	Olive, 624 S.W.3d at 772 (quoting Loretto, 458 U.S. at 432).
34	U.S. Const. art. I, § 8, cl. 8.
35	Olive, 624 S.W.3d at 773.
36	See Fla. Prepaid, 527 U.S. at 642 (“[Patents] are surely included within the ‘property’ of which no person may be deprived by a State without due process of law. And if the Due Process Clause protects patents, we know of no reason why Congress might not legislate against their deprivation without due process under § 5 of the Fourteenth Amendment.”).
37	See The Federalist No. 48 (James Madison) (“a mere demarcation on parchment of the constitutional limits . . . is not a sufficient guarantee against [tyranny]”); see also Considering the Role of Judges Under the Constitution of the United States: Hearing Before the S. Comm. on the Judiciary, 112 Cong. 6 (2001) (statement of Justice Antonin Scalia) (“The real constitution of the Soviet Union did not prevent the centralization of power in one person or in one party. And when that happens, the game is over. The bill of rights becomes what our Framers would call ‘a parchment guarantee.’”).
38	See, e.g., Marbury v. Madison, 5 U.S. 137, 175 (1803) (“It cannot be presumed that any clause in the constitution is intended to be without effect.”).
39	See supra notes 4–6 and accompanying text.
40	See generally, Doris Kearns Goodwin, Wait Till Next Year (1998).

Mark Brodt

Mark Brodt is a second-year J.D. candidate at Fordham University School of Law and a staff member of the Intellectual Property, Media & Entertainment Law Journal. He is a patent agent and holds bachelor’s degrees in Physics and Mathematics from Brooklyn College. He is also a member of the Fordham Law Moot Court Board.

What the Constitution Giveth, Texas May Taketh Away

What the Constitution Giveth, Texas May Taketh Away

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Mark Brodt