Licenses and the Property/Contract Interface
51 Pages Posted: 19 Jun 2017 Last revised: 15 Dec 2017
Date Written: September 18, 2017
End-User License Agreements exist on the property/contract interface, creating rights and obligations whose natures blend in rem and in personam characteristics. This Article argues that EULAs’ hybrid status indicates that these licenses will be most economically efficient and socially beneficial when they are less standardized than property interests and less flexible than contract interests can be. In particular, more effective EULA regulation can be achieved by providing better notice to licensees about the content of licenses and by creating substantive legal protections for licensees. Possible protective measures involve regulating how courts and other legal actors should approach use-restrictive license terms and revocable licenses.
But any specific suggestions pale in comparison to the more general insight that EULAs’ location on the property/contract interface provides. There are structural reasons to believe that EULAs will neither be just nor economically efficient so long as their terms are enforced as though they are contractual, while their violations are punished with supercompensatory and injunctive property remedies. While the best corrective protections may vary as the subjects of EULAs change, legal actors must broadly recognize that licensors, licensees, and third-parties can be better off if the law of EULAs is crafted in light of their hybrid nature.
Keywords: licenses, copyright, digital copyright, eula, end-user license agreement, terms of service, property, contract, property/contract interface, Hohfeld, market for lemons, lemons market, market failure, in rem, in personam, paucital, multital, compound-paucital
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