COPYRIGHT AND THE JURISPRUDENCE OF SELF-HELP

By Julie E. Cohen

ABSTRACT

The proposed draft of Article 2B grants broad rights to enforce electronically contract provisions governing access to and use of digital works. Purveyors of digital works may engage in electronic self-help following breach of contract, and may also elect to foreclose unauthorized uses ex ante, via electronic "regulation of performance." This Article examines these provisions in light of existing law authorizing self-help repossession of tangible chattels, leading academic justifications for self-help repossession, and federal copyright law and policy. It concludes that the provisions authorize an unprecedented degree of intrusion into private homes and offices, that they lack a sound theoretical basis, and that their adoption would threaten constitutionally-mandated limits on copyright protection. It concludes, further, that the law should afford users of digital works rights of electronic self-help where necessary to preserve the copyright balance.

TABLE OF CONTENTS

I. INTRODUCTION 1090

  II. ELECTRONIC FENCING AND SELF-HELP UNDER ARTICLE 2B 1092

  III. DOCTRINE: SELF-HELP, TRESPASS, AND THE RIGHTS OF PERSONS 1101

  A. SELF-HELP AND PRIVATE SPACES 1102

B. SELF-HELP, NOTICE AND "MATERIALITY" 1110

C. SELF-HELP IN TIME 1115

IV. THEORY: CONSENT, EFFICIENCY, AND NORMS 1118

  V. THE U.C.C., COPYRIGHT, AND THE PUBLIC-PRIVATE DISTINCTION 1128

  A. PREEMPTION AND THE "DORMANT INTELLECTUAL PROPERTY CLAUSE" 1129

B. SPEECH HARMS AND THE FIRST AMENDMENT 1133

C. PRIVATE ENFORCEMENT AND DUE PROCESS 1134

D. PRIVATE INTERESTS AND PUBLIC ACTS 1135

VI. RESTORING THE BALANCE: THE CASE FOR LICENSEE SELF-HELP 1137

  VII. CONCLUSION

I. Introduction

A new wind is blowing in copyright law. For centuries, authors and their assignees have relied primarily on federal copyright law to define and protect their legal rights. Suddenly, that may be about to change. New developments in digital technology offer copyright owners the tantalizing possibility of near-absolute control of their creative and informational content, even after its delivery to end users, via self-enforcing digital contracts. Copyright owners, along with purveyors of other (noncopyrightable) informational content, envision using these contracts to secure-and redefine-their "informational rights."1 Within this vision of private ordering and technological self-help, contract law rather than copyright law is paramount. Limits on information ownership set by the public law of copyright are conceived as optional restrictions that can be avoided using appropriate contractual language.

Proposed Article 2B of the Uniform Commercial Code (U.C.C.) is designed to play a central role in the restructuring of information law along contract-based lines. Information providers hope that Article 2B will establish, as background principles of commercial law, rules that will enable them to implement their vision of self-enforcing private ordering.2 The drafters of Article 2B characterize these rules as broadly consistent with the existing framework of commercial law.3 They suggest, further, that the private agreements reached under such a regime can coexist with federal copyright law without disrupting the balance it seeks to establish.4 Information providers agree, and argue that, in any case, such agreements lie beyond copyright's preemptive reach.5 This article examines those assertions. It concludes that the provisions of Article 2B threaten a substantial departure from the existing law of self-help, and that this departure cannot be justified by reference either to doctrine or to theory.6 Moreover, copyright law and policy point the other way, toward affording self-help rights to users of copyrighted works.

Part II of this article describes the emerging digital "rights management" technologies and traces the history of the provisions of Article 2B that are designed to authorize or facilitate their implementation. Although the most recent draft of Article 2B appears to moderate one of these provisions, issues that earlier drafts had resolved in favor of electronic private ordering will now confront courts. Parts III and IV explore, respectively, the doctrinal foundations of self-help under the U.C.C. and more theoretical models advanced by legal scholars, and conclude that none of the common justifications for commercial private ordering supports according information providers the broad powers of self-help that they claim as a matter of right. To the contrary, Article 2B's self-help provisions raise important problems that the drafters have failed to address. In Parts V and VI, I evaluate the proposed law and emerging practice of electronic self-help against the backdrop of copyright law and policy. Part V examines the role of the public-private distinction in mediating between copyright and contract, and argues that Article 2B is not merely a neutral background for private bilateral agreements, but a public act of social ordering that is flatly inconsistent with copyright and First Amendment principles. Part VI argues that licensees, not licensors, should be accorded rights of electronic self-help when necessary to preserve the balance that the Copyright Act is intended to establish.

II. Electronic Fencing and Self-Help under Article 2B

For information providers, digital networks represent both a promise and a threat. Computer networks eliminate or minimize many of the costs associated with product distribution, and make it possible for small businesses to serve national or even global markets. However, digitized information is easily copied, and networks also minimize the costs of distributing unauthorized copies. Information providers have expressed fears that by making their products available in digital form, they may destroy their own markets. Scholars and industry commentators dispute these predictions of total disaster, and argue that the economic principles that determine profitability in markets in tangible commodities do not necessarily apply to markets in intangibles.7 Nonetheless, information providers have stated a reluctance to experiment with digital distribution without additional legal and technological protection against unauthorized copying.8

Happily for information providers, digital technologies also offer a solution to their perceived problem. The same technologies that can be used to propagate information can also build fences around it. Together with technology experts, information providers are developing secure packaging and delivery software designed to prevent purchasers and third parties from making unauthorized uses of digital content.9 As envisioned by the copyright and information industries, these "rights management systems" will be "capable of detecting, preventing, and counting" almost every conceivable use of a digital work.10 In addition, these industries lobbied heavily for nearly three years for legislation that would prohibit tampering with or circumventing these systems.11

Unhappily for consumers, however, digital rights management regimes will enable information providers to appropriate far more protection against copying and distribution than intellectual property law now provides. Copyright law allows some reuse of protected expression under a variety of exceptions designed to serve the public interest, and allows any reuse after the term of copyright protection has expired.12 Copyright also does not attach to facts, ideas, or functional principles; instead, it treats these materials as public domain "building blocks" for future works.13 Many compilations of information consist largely of such public domain material and are protected only minimally, if at all, by copyright.14 The common law tort of data misappropriation provides some protection for uncopyrightable facts, but cannot protect against all copying, since the Copyright Act expressly preempts state-created rights that are "equivalent" to the rights afforded under copyright law.15 Trade secrecy law protects only information that is not generally known or readily ascertainable, and allows discovery of protected information by reverse engineering and other "proper means."16 In short, legal protection against unauthorized copying and distribution is incomplete, and is so by design.

Information providers conceive digital rights management systems as self-enforcing contracts, and argue that copyright law does not displace private bargains that alter the distribution of rights and privileges as between the parties.17 However, courts have differed on the validity, as a matter of contract law, of "shrinkwrap" licenses that purport to restrict the uses of information products based on terms packaged with the product and revealed to the customer after purchase.18 Accordingly, many information providers have supported efforts to draft a new Article 2B of the Uniform Commercial Code to establish different ground rules for transactions in software, information, and other intangible intellectual products.19 Among other things, proposed Article 2B is intended to validate self-enforcing shrinkwrap (or "clickwrap") licenses-including mass market standard forms-implemented via digital rights management regimes.20

Proposed Article 2B implements this regime of electronic private ordering primarily through two provisions. Section 2B-310, which applies to performance of the contract, allows "electronic regulation of performance" by either party in specified circumstances.21 First, section 2B-310 permits electronic regulation if expressly authorized by a term in the license agreement.22 However, section 2B-310 goes on to create a list of exceptions that virtually swallows this express disclosure rule. The license need not disclose electronic regulation that merely implements a stated temporal or quantitative restriction on use, or enforces "informational rights which were not granted to the licensee."23 Nor must it disclose electronic regulation that "prevents uses of the information which are inconsistent with the agreement"-apparently, even if copyright law or other applicable "informational rights" law would allow such uses.24

Effectively, section 2B-310 would allow information providers to contract around copyright law without disclosing that fact to users. The Reporter's Notes to section 2B-310 make only oblique mention of copyright preemption. They assert that the provision simply represents "[t]he basic principle ¼ that a contract can be enforced."25 Proposed Article 2B does contain another provision, section 2B-105, that acknowledges the possibility of copyright preemption of particular contract terms; in the accompanying Reporter's Notes, the drafters disclaim jurisdiction to make specific recommendations about preemption.26 Nonetheless, both the Reporter's Notes and the prefatory memorandum accompanying Article 2B make clear their belief that even mass market contracts that are inconsistent with copyright are not necessarily invalid for that reason.27 The drafters describe Article 2B's approach to the question of federal preemption as one of "neutrality"; under this vision, it appears, contract may extend wherever it is not expressly prohibited by Congress or the federal courts.28

Section 2B-715, which applies in the event of a breach by the licensee justifying cancellation of the agreement, governs "self-help repossession" by the licensor.29 Unlike section 2B-310, which has no analogue in the current U.C.C., section 2B-715 is expressly modeled after section 2A-525, which authorizes self-help repossession of leased property by the lessor, and section 9-503, which authorizes self-help repossession of secured collateral by the holder of the security interest.30 Like sections 2A-525 and 9-503, section 2B-715 allows self-help repossession following cancellation if possible "without a breach of the peace."31 Cancellation, in turn, requires a material breach or express contractual authorization.32 In addition, section 2B-715 adds the express requirement that the repossession not create "a foreseeable risk of personal injury or significant damage to information or property other than the licensed information."33

The most recent draft of Article 2B is silent on the question of electronic self-help repossession-or, more precisely, since nothing physical need be reclaimed, electronic self-help deactivation or depossession-of licensed information products. This was not always so. In previous drafts, Article 2B contained a special provision expressly authorizing electronic self-help repossession.34 Section 2B-716 (now omitted) established additional procedural requirements for electronic self-help in cases involving licensed software "material to the licensee's business."35 Such material could be repossessed or "depossessed" electronically only if the licensor first gained physical possession of a copy (subject to the "breach of the peace" limitation) or if the license authorized the repossession and the licensor gave at least ten business days' notice.36 By implication, licensed information consisting of "informational content," or used for personal rather than business purposes, was subject to electronic repossession without physical possession and without notice of any kind, as long as no "breach of the peace" occurred.37

During its short life, proposed section 2B-716 was enormously controversial. The drafting committee itself was deeply divided on the question of electronic self-help, so much so that for a time section 2B-716 existed in two versions, a majority version allowing electronic self-help and a minority version prohibiting it except to the extent expressly authorized by other law.38 The new section 2B-715 simply steers clear of the entire controversy without resolving any of the issues that former section 2B-716 raised. The Reporter's Notes state that the draft "takes no position on whether self-help can be pursued through electronic means."39 This abrupt retrenchment leaves to the courts the task of interpreting the "breach of the peace" and "material breach" limitations in the context of digitally-mediated transactions in creative and informational works.

Together with other provisions of Article 2B that validate mass market "licenses,"40 sections 2B-310 and 2B-715 would give information providers enormous power to alter the balance of creator rights and user privileges established by the Copyright Act.41 This is true even though section 2B-715 now leaves unanswered the question of electronic self-help following cancellation. As Professor Friedman correctly recognizes, the most effective electronic self-help is the kind covered by section 2B-310-so-called "electronic regulation of performance" that simply forecloses potential breach at the outset.42 As the technologies of electronic regulation become more sophisticated, a separate right of electronic "repossession" is of less moment. As I have noted, the drafters of Article 2B nonetheless characterize sections 2B-310 and 2B-715 as entirely consistent with the existing framework of commercial law, and indicate their belief that the regimes of private ordering authorized by Article 2B would not violate copyright law or other law or policy.43 The remainder of this article evaluates those contentions.

III. Doctrine: Self-Help, Trespass, And The Rights Of Persons

Both the common law and the U.C.C. have traditionally afforded rights of self-help to vendors and creditors. However, both bodies of law limit the right to enter private property to repossess goods, allowing such entry only when the circumstances indicate consent, or at least acquiescence. Judged against these limits, Article 2B sanctions a degree of intrusion into private homes and offices that is unprecedented. It also authorizes self-help in a much broader range of circumstances, including those in which licensee conduct, although defined as breach, is privileged by the public law of copyright. To a far greater extent than existing law, Article 2B elevates the rights of mass market vendors over those of consumers and rights in "informational property" over the rights of persons to security and autonomy within private spaces.44 Whether and to what extent this approach is warranted depends on how "intrusion" is conceived and on the purposes that self-help and the legal standards governing it are thought to serve.

Before digital technologies made remote or prospective self-help possible, self-help repossession necessarily entailed physical recovery of disputed goods following an alleged breach of contract. The law of self-help thus has been, until now, the law of physical, ex post repossession of chattels, which in turn has focused heavily on the likelihood of physical violence. Courts considering these cases have not explained, because they have not needed to, whether the judicially-developed "breach of the peace" standard is only designed to minimize the likelihood of physical violence and harm to persons and property, or is (or should be) more broadly concerned with preventing nonconsensual intrusion-and if so, what kinds of nonconsensual intrusion count. Because the universe of possible transgressions with respect to leased and secured chattels is relatively narrow, they also have not explored whether in other circumstances the law might or should impose substantive limits on the sorts of dereliction that justify self-help behavior. Finally, they have not considered whether standards developed to govern self-help following cancellation should apply to self-enforcing "regulation of performance" ex ante. Article 2B's proposed extension of self-help privileges to encompass electronic repossession and prospective self-help requires answers to all three sets of questions.

A. Self-Help and Private Spaces

The physical self-help tactics employed at the dawn of the consumer credit era created risks of physical violence and raised questions about debtors' rights to security against trespass and other intrusions. To minimize these concerns, courts developed rules that allowed self-help repossession only if it could be accomplished without a breach of the peace.45 Although courts created exceptions to the law of trespass to accommodate a perceived need for self-help repossession of chattels kept on private property, they used the "breach of the peace" standard and the concept of noncoerced consent to cabin these exceptions. Thus, creditors could enter private property to recover chattels sitting in plain view in a yard or driveway, if the debtor offered no resistance.46 They could not, however, break into a debtor's home or business premises, or use or threaten force to gain entry if permission to enter was refused.47 Only the state could enter a private home or office against the owner's will, and then only within the limits established by due process principles.48

The rules governing self-help repossession under Articles 9 and 2A of the U.C.C., which expressly incorporate the "breach of the peace" standard, mirror those developed under the common law.49 Creditors may enter upon private property, but their ability to do so is severely restricted. "'The two primary factors considered in making th[e] determination are the potential for immediate violence and the nature of the premises intruded upon.'"50 Although many contracts expressly authorize creditors to enter private premises to effectuate repossession, courts have read the breach of the peace limitation into these clauses, as well.51 In the eleven states that have adopted the Uniform Consumer Credit Code ("U3C") as a modification to Article 9, moreover, the creditor may not enter a dwelling "unless the consumer voluntarily surrenders possession of the collateral to the creditor."52 Courts in non-U3C jurisdictions have not specified what constitutes permissible entry, and why, in situations not involving overt force or threats of force.53 Generally speaking, courts in non-trespassory repossession cases have allowed some forms of deceit and trickery and prohibited others, and have justified both kinds of results by reference to the relationship between force, consent, and the likelihood of harm.54

How should the ancient "breach of the peace" standard and its associated concern with protecting private spaces be understood in connection with virtual, nonrepossessory self-help? Is the touchstone nonconsensual intrusion, or is the objection to nonconsensual intrusion simply that it threatens violence? Plainly, the nonviolent nature of electronic self-help-not to mention electronic "regulation" of performance-does not negate its invasiveness from the consumer's perspective. The widespread outrage that greeted rumors of a "registration wizard" in Microsoft's Windows software, which purportedly reported back to Microsoft via the Internet on the contents of users' hard drives, suggests that individuals also assess intrusion in other ways.55 (Imagine, for example, that a team of high-tech repo men had just used a transporter device to "beam" your sofa out of your living room and back to the furniture store. It would be difficult for the creditor to convince you that no intrusion had occurred.) The law of privacy agrees that intrusion need not be violent to be actionable; nonconsensual "intrusion upon seclusion" is actionable without regard to the intruder's use of force.56 Assessing the degree of intrusion allowable as a matter of commercial law, therefore, requires us to do more than simply weigh the risk of physical injury to persons or property against the licensor's countervailing proprietary rights.

The fact that section 2B-715 also prohibits self-help repossession in situations presenting a risk of injury to information, independent of any injury to persons or tangible property, indicates some recognition that physical harm is not the only kind of harm threatened by unilateral acts of private enforcement.57 Article 2B makes clear, however, that the drafters are far more concerned with intangible harms to commercial interests than with intangible harms to individuals. Thus, section 2B-715 includes special protections for the licensee whose trade secrets become entangled with information "belonging to" the licensor, but includes no such protections for the licensee whose diary or great American novel meets a similar fate.58 The Reporter's Notes to sections 2B-310 and 2B-715 do not even acknowledge that the law of privacy exists, or that "privacy" is a state or characteristic that has independent value for individuals and for society.

Determining whether and how privacy concerns should influence the law of electronic self-help requires defining the interests that "privacy" protects and the senses in which it is subject to invasion. Volumes have been written on this subject, and the exact provenance of privacy is still unsettled. For purposes of this article, however, it is sufficient to note that privacy is broadly acknowledged as having decisional, informational, and spatial dimensions.59 Plainly, the self-help rights provided by Article 2B do not directly implicate privacy concerns related to intimate personal decision-making.60 Self-help might entail collection and revelation of information about an individual licensee's activities. The privacy implications of such monitoring are clear, and are thoroughly treated elsewhere; I will not repeat that analysis here.61 My concern here is with the new kind of self-help that digital technologies allow-self-help that consists solely of "dumb," hard-wired prevention of unauthorized conduct. Although this kind of self-help does not appear to raise informational privacy concerns, that does not end the inquiry.62 Whether such self-help implicates privacy in the spatial sense remains to be considered.

The common law of privacy protects only those expectations of privacy that are "reasonable."63 One possible understanding of "reasonableness" in the context of assertedly private spaces is that the state of the art of self-help technology determines (and limits) the expectations of privacy that consumers can reasonably have. This is not entirely far-fetched; technology plays an important role in shaping privacy-related rules and norms.64 Yet if reasonable expectations are defined solely by the limits of technological possibility, privacy has a bleak future. Individuals' legal entitlement to privacy will simply recede as the technologies of intrusion advance. This approach also rests on an important, and misguided, assumption concerning the unidirectional nature of technological progress. Technology can evolve in privacy-destroying or privacy-protecting ways. The actual path of technological evolution will depend on many factors, including the priorities of stakeholders and the processes by which stakeholders are identified and consulted.65 To say that electronic self-help is legitimate because it is possible ignores the degree to which both "privacy" and "technology" are normative as well as positive constructs-functions of the laws and mores of society as well as the laws of physics.

Another possible interpretation of "reasonableness," suggested by cases involving alleged intrusion upon seclusion via remote listening and viewing devices, is that an intrusion into private space is actionable only if it renders the space accessible, or potentially so, to a human observer.66 This answer also is unsatisfactory, however, because it depends, ultimately, on informational privacy concerns. Privacy protects certain spaces not only to shield personal behaviors from observation by others, but also to preserve a zone of autonomy from interference by others.67 Freedom from observation means little without freedom from outside control. Because autonomy interests may be violated even if informational interests are not, whether a human observer gleans any direct information from an autonomy-destroying intrusion is irrelevant. It is worth noting, too, that "dumb" intrusions are not divorced from human agency, but only separated from it in time. In a sense, the intrusion (or at least its but-for cause) occurred much earlier, when the licensor determined that consumers in their private homes and offices would be allowed to take certain actions but not others.68

It is true that "dumb" self-help is a different kind of intrusion than that caused by human perception. Yet to characterize it as "merely" a communication surely would go too far. A dinnertime telemarketing phone call may annoy, but a spurned telemarketer cannot turn off software that happens to be running on a personal computer in one's study, or deny access to copies of digital works stored there. Electronic self-help is a communication that suspends or restricts preexisting access to stored digital information; as such, it is qualitatively different than an unwanted telephone call that has no further effect.69

Telephone, electric, and gas companies supply a somewhat closer parallel. These entities have the undisputed power to disconnect service to private homes and offices. However, they do not have the power to reach inside the home or office and disable lawfully acquired products, such as lamps, stoves, and telephones, merely because they require electricity, gas, or telephone wire to function. In addition, public utilities' power to exercise self-help is limited in other ways. The telephone company may not disconnect a consumer for making fun of the company, nor for taking apart the telephone to try to build a better one; it may do so only for nonpayment, and only after providing notice and a grace period.70 In contrast, section 2B-310 and (depending on judicial interpretation) possibly section 2B-715 authorize intrusion into private individuals' homes, offices and computer systems for a wide variety of misconduct, without prior notice, as a matter of routine business practice. Thus, to decide whether the intrusions-by-communication authorized by Article 2B are reasonable based on a public utility analogy, we also must consider whether their subject matter justifies their scope.

B. Self-Help, Notice and "Materiality"

Self-help historically has been understood, and rightly so, as a drastic remedy. For this reason, existing commercial law requires that the range of conduct that will trigger self-help behavior be clearly defined. For leases, the language of Article 2A sets these initial limits. A lessor of tangible property may engage in self-help only if the lessee "wrongfully rejects or revokes acceptance of goods or fails to make a payment when due or repudiates" all or part of the contract, or otherwise "substantially impairs" its value.71 The language of Article 9, in contrast, is relatively open-ended; it allows self-help repossession by the holder of a security interest upon the debtor's "default."72 Because Article 9 does not define "default," courts have required that the events alleged as default be defined as such in the security agreement.73 Moreover, courts in a number of states have cabined contractual events of default by imposing objective limits on "catchall" belief-in-insecurity clauses;74 by restricting the use of insecurity-acceleration clauses and requiring clear notice of acceleration in all relevant documents;75 by limiting the use of demand clauses if the contract also contains enumerated events of default;76 and by applying principles of estoppel to bar repossession or acceleration by creditors in some circumstances notwithstanding the contract language.77 In U3C jurisdictions, these restrictions are codified; a creditor may not accelerate the debt, but instead must afford both notice and an opportunity to cure the deficient installment(s), and may proceed with self-help repossession only upon objective evidence of "significant impairment of the prospect for payment or realization on the collateral."78 These restrictions are designed to mitigate the severity of the self-help remedy by ensuring that self-help will not follow minor or debatable infractions, and by alerting consumers to the kinds of conduct that create risk.

Measured against existing law and practice, the self-help provisions of proposed Article 2B require much less advance notice, and authorize self-help in an even broader range of circumstances. Section 2B-310, in particular, allows electronic regulation of any behavior considered inconsistent with the contract, without contractual notice in many cases.79 In contrast, although the Article 2B drafting committee had previously approved post-cancellation self-help provisions without any materiality restriction, the new version of section 2B-715 requires either that the breach be "material" or that the license expressly define it as grounds to cancel.80 Even these restrictions, however, do very little to bring Article 2B in line with the existing law of self-help repossession.

First, as described above, existing law requires written notice of the possibility of electronic self-help in all cases, not just some. This is true for electronic self-help as well. Every court that has considered a challenge to electronic self-help repossession of licensed software has indicated that in view of its drastic nature, electronic self-help requires prior contractual authorization.81 The Reporter's Notes to sections 2B-310 and 2B-715 do not mention these decisions at all.82 The omission is hard to fathom. Given the severity of the consequences and the inability of most consumers to evade them, lack of written notice of the possibility of electronic self-help is simply unfair. (If a creditor considered itself entitled to "beam" your sofa out of your living room, or to prevent you from installing new cushion covers, you almost certainly would prefer to know this up front.) It is worth noting, too, that none of the cases concerning electronic self-help has involved a non-negotiated, mass market contract; thus, no court was required to consider whether the "notice" afforded consumers by standard-form provisions is enough to validate electronic self-help. It is at least an open question whether the severity of the remedy justifies heightened notice requirements.83

Second, even apart from the issue of notice, the self-help rights afforded by Article 2B are extremely broad. In part, this is the result of specific drafting decisions; even section 2B-715's materiality restriction is virtually meaningless because Article 2B's definition of "material" breach is so broad that it encompasses almost any breach.84 In part, however, it is a consequence of the open-ended nature of "informational rights" as conceived by licensors and the Article 2B drafting committee. Both Article 2A and Article 9 inherently concern a narrower range of potential transgressions than Article 2B. The typical Article 2A lease or Article 9 security agreement is concerned only with behaviors that bear on the debtor's financial soundness or on the availability of the collateral to satisfy the debt.85 In practice, a default most often will consist of failure to make required payments. Article 2B, in contrast, contemplates a seemingly limitless range of restrictions on the uses that licensors may make of creative and informational works, and appears to contemplate electronic enforcement of most such restrictions-which, in turn, exacerbates the notice problem still further. An expansive conception of breach need not, however, automatically translate into an expanded scope for self-help. At minimum, before adopting this robust conception of private ordering, we should weigh its merits and demerits and consider other possible approaches.

Affording licensors such broad powers of self-help is enormously problematic, for several reasons. First, the determination of breach (or, as in section 2B-310, behavior "inconsistent with" the license) is not always as clear-cut as sections 2B-310 and 2B-715 imply. Deciding whether a consumer has failed to pay is relatively easy; for other license provisions, however, the determination of breach may require resolution of difficult questions of fact or law.86 Appointing the licensor judge, jury, and executioner on these questions seems singularly unwise. Second, the alleged inconsistency or breach may consist of conduct that copyright law permits. A licensee might trigger digital policing mechanisms while trying to fix bugs in licensed software, or using the licensed information to create a classroom handout or critical commentary.87 In such a case, the licensee has a defense-copyright preemption-that is unavailable to the person who simply has failed to pay for goods received, and the outcome may turn-as the drafters themselves note-on the resolution of difficult questions of federal law.88

One obvious solution to the overbreadth problems in sections 2B-310 and 2B-715 is to authorize self-help only for the same kinds of misconduct that have traditionally warranted it: failure to pay and other conduct that substantially impairs the value of the covered property based on an objective standard.89 In the case of section 2B-715, courts could simply interpret "materiality" this way. Neither approach appears to have occurred to the drafters, for reasons that also are self-evident: such restrictions would diminish Article 2B's utility as a vehicle for private ordering of rights in information. Yet at the same time, the drafters' decision to impose some sort of materiality restriction, however vague, on self-help under section 2B-715 suggests a recognition, however murky, that wholly unrestrained private ordering might be bad policy. A narrow understanding of "materiality" makes the most sense, both in terms of fairness to consumers and in terms of broader societal concerns about the rule of law. Section 2B-310, however, contains no express materiality restriction, and as we have seen, there are other significant differences between the self-help powers conferred by section 2B-310 and those conferred by 2B-715. Thus, to finish the project undertaken in this Part, we must consider the drafters' implicit assumption that "regulation of performance" ex ante is fundamentally different than "self-help" ex post.

C. Self-Help in Time

Sections 2B-715 and 2B-310 diverge markedly with regard to materiality and notice; this suggests that the drafters see an important difference between the two types of self-help. This difference follows fairly straightforwardly from the libertarian notion of freedom of contract. From this perspective, it is conceivable that wholly unfettered rights of "repossession," or post-breach self-help, might unacceptably blur the line between the rule of law and the state of nature. A central purpose of the social contract, after all, is to eliminate the chaos and uncertainty that would arise in a society without formal systems of dispute resolution. Electronic regulation, however (or so the argument goes), invokes the law of the market, not the law of the jungle. "Regulation of performance" is simply a high-tech way of describing the licensor's right to determine the features of its product. The restrictions become part of the product, which consumers can take or leave.90

The freedom of contract argument for unfettered electronic regulation of performance is simple and elegant-and breathtakingly sophomoric. First, it conflates choice with submission and product capabilities with control of behavior. Your vacuum cleaner cannot fly, or clean your oven, and you have no particular right to one that can. However, except in special cases governed by the patent laws, within private spaces you may use or modify a lawfully-acquired vacuum cleaner in any way you see fit. There might be questions about liability for injuries arising from unintended uses, but that is a separate matter well within the scope of existing contract and tort law concerning warranties, warnings, and disclaimers. Second, the freedom-of-contract argument conflates digital code with "contract," and calls the result a purely private form of ordering exempt from public policy limits-although "contract" is not and never has been exempt from such limits.91 Section 2B-310 sanctions the control of people, not products; it negates agency, and calls the result freedom.

Theory aside, consider (again) your living room sofa. Suppose, first, that the purchase agreement states that no more than three people may sit on the sofa at a time. When a fourth person (say, perhaps, the small child of an adult sofa-sitter) attempts to join the others, the sofa vanishes, dumping its erstwhile occupants onto the floor. This is repossession, swift and (largely) bloodless.92 Now suppose, instead, that the child's approach activates an invisible force field, such that the child may not sit while all three adults remain. There is no repossession (the sofa remains) and no loss of "use" (as defined by the licensor), but only regulation of use. There is little risk of physical injury, and little need for invasion of privacy in the informational sense. Yet I suspect most readers will feel that from the standpoint of personal autonomy within a space hitherto conceived as private, there is not much difference between the two scenarios.93 Article 2B stands for the proposition that intellectual property is different enough from sofas that licensors can, with straight faces, propound and demand acceptance of precisely the latter sort of regime.94

Is there any consideration that might justify broader rights of private ordering and self-help repossession, and a correspondingly restricted sense of individual autonomy, as to information products than as to tangible articles of commerce? The answer, according to the drafters of Article 2B, seems to be that unauthorized use is reconceived as an invasion of the information provider's "property" interests in the work, as distinct from the particular copy the licensee happens to possess.95 It is true that intellectual property and sofas are not entirely the same-sofas are not public goods, and cannot be costlessly copied-but the need to prevent market-destroying appropriation is a very different sort of argument, and it is far from clear that it justifies the full range of autonomy-destroying practices that section 2B-310 would allow.96 Moreover, the fact that the licensor may have "informational rights" in the licensed subject matter also cuts the other way, because "informational rights" are limited by law in ways that rights in chattels are not. A copyrighted work is not "property" in the same sense as land or consumer goods, because the public has protectable interests in certain public-domain aspects of copyrighted works at the outset.97

Even the common law of property historically has recognized certain public rights of access to or across the property of another.98 Most closely analogous is the public trust doctrine, which preserves a right of access across privately-owned land when necessary to reach beaches and other areas that the law considers to be commonly-owned.99 Similarly, the exceptions and exclusions in copyright law preserve public access to the linguistic, cultural, and scientific commons. The common law of property also recognizes public rights of privacy while on the property of another; for example, landlords may not use listening devices or trick mirrors to spy on their tenants, or install viewing devices in public restroom stalls.100 In short, the fact that something is "property" does not, without more, confer on its owner rights of absolute, unqualified control.101 The scope of permissible private ordering of others' behavior within private spaces should be a subject of conversation for society generally, not a unilateral decision for information providers.


In sum, Article 2B proposes to arrogate to private information providers the power to reach into customers' homes and offices and literally shape their behavior-in many cases without even the courtesy of express contractual notice. Even if self-enforcing digital contracts did not implicate federal copyright law, these new technological methods for regulating the use of information products and effectuating self-help repossession would raise important questions about the permissible scope of private enforcement activity. Ultimately, Article 2B requires us to decide whether "self-help" as a legal construct exists solely for the narrow purpose of protecting vendors and consumers from avoidable financial harm, or also for the broader purpose of allowing vendors to shape the behavior, even within private spaces, of those with whom they deal. That such self-help concerns intellectual property makes it more, not less, troubling, because private ownership of intellectual property traditionally has been conceived as less complete than private ownership of chattels. These questions deserve far more careful consideration than they appear to have received. Platitudes about the need for enforcement of contracts are simply inadequate to justify such a radical reallocation of authority to monitor and control individual conduct.

IV. Theory: Consent, Efficiency, and Norms

The electronic regulation and self-help provisions of Article 2B also cannot be justified under any of the prevailing scholarly accounts of self-help and its role in the fabric of commercial exchange. Although these theories run the gamut from freedom of contract to economic efficiency, they share a common failing. All of the theories ignore or assume away the structural peculiarities of the consumer mass market, and thus fail to recognize that neither consent nor efficiency can be judged in the abstract. In addition, theoretical approaches that privilege allocative efficiency to the exclusion of all other considerations are inappropriate given the public good nature of creative and informational works. When mass market transactions in information products are considered in context, theoretical justifications for unfettered private electronic ordering become difficult to sustain.

Several legal scholars and at least one court have sought to justify enforcing contract terms governing use of creative and informational works by reference to individual freedom of contract. Consumers, the theory posits, are free to accept or reject the terms offered in the market. If they consent to license agreements that abrogate the user privileges established by copyright law, it must be because they find such agreements desirable.102

In the mass market context, however, the argument from consent is far too simple. The market system established by the U.C.C. bears little resemblance to the atomistic market of the neoclassical, libertarian paradigm, which presumes perfect information and fully-informed consent as to every term of the deal.103 The U.C.C. was designed to allow commercial transactions to proceed without exact specification of every term, and in particular to obviate the need for bargaining over the allocation of product-related risks.104 Article 2B's mass market license provisions continue this approach; they are designed (among other things) to facilitate market exchange in the absence of complete information. Particularly for complex products (or "ordinary" products that have been subjected to complex contract terms) the argument that the structure of the typical mass market transaction enables voluntary, informed exchanges with respect to most terms other than price is sheer fantasy.105 This is especially true for implicit contract terms, such as the electronic "regulation" of behavior "inconsistent with the agreement" authorized by section 2B-310.106 This is not to say (yet) anything about the legitimacy of particular mass market terms expressly or implicitly authorizing self-help, but only that a meaningful justification for broad powers of self-help must proceed without reliance on a hypothetical state of affairs that bears no resemblance to reality.

At the other end of the epistemological spectrum lie efficiency-based arguments of varying degrees of sophistication.107 The simplest economic rationale for allowing self-help repossession turns on the seller's opportunity cost. Creditors seeking expanded self-help powers typically have argued that requiring them to incur litigation costs, or to charge off as losses items of collateral too small to justify litigation, will raise the price of credit for other, law-abiding consumers.108

This "lost-value" justification for self-help does not apply as neatly to intangible intellectual property, however, both because of the public good nature of creative and informational works and because of the broad scope of self-help contemplated under Article 2B. First, the "lost value" attributable to a product whose value lies chiefly in its public good aspect is inherently speculative. Failure to recover a car after the buyer defaults precludes the secured creditor from recovering a portion of its investment; failure to recover a copy of a creative or informational work does not preclude the information provider from realizing a profit on the work.109 Particularly in the case of digital works, the supply of copies is infinite and virtually costless, and there is no necessary or inevitable relationship between the price charged to consumers and the value invested in each copy. The point is not that information providers have no claim to remuneration for copies of works-plainly, they do and should-but only that "lost value" arguments are less compelling in this context; thus, it seems odd that information providers should demand greater powers of self-help than are available to purveyors of tangible goods.110

Second and more important, Article 2B authorizes self-help in a wide variety of circumstances unconnected to failure of payment or financial insecurity-for example, unauthorized modification of software or copying of content for educational purposes.111 Even if lost profits warrant electronic self-help when consumers fail to pay, that does not justify using lost profits to bootstrap electronic self-help rights in other cases. Here again there is a gray area, though: if the information provider wishes to charge a fee for every use of a work, or to charge different users different types of fees, may not any case be converted into one of failure to pay? The answer is complicated. In a recent essay, Terry Fisher argues that allowing information providers the freedom to price discriminate may benefit society-except when ceding greater control to information providers threatens other important social values.112 Plainly, price discrimination will benefit marginal consumers; plainly too, there will be difficult cases involving marginal sellers for whom the extra profit would make the difference.113 But the need to consider other social policies-discussed at greater length below-means that information providers cannot be the ones to decide when certain uses may be restricted, or when electronic self-help may follow. Decisions about privatizing information policy must be based on more than the licensor's desire for additional profit.

Other economic theorists focus on the general deterrence value of self-help rules and practices. Robert Scott argues that the threat of self-help plays an important role in inducing non-defaulting consumers to pay their debts.114 He characterizes the right of self-help repossession as an economic hostage offered by the debtor in a game-theoretic bargaining environment to signal the debtor's commitment to pay.115 In turn, the creditor signals its commitment to enforce the debtor's promise by precommitting to "a sequence of discrete steps ¼ each act escalating incrementally."116 Scott contends that self-help remedies as a class are important to a creditor's ability to maintain a reputation as an enforcer of promises. The challenge, then, is to "design a pattern of reciprocal commitments that effectively constrains the debtor without unduly tempting the creditor."117

If we accept Scott's argument as sufficient in principle to justify some self-help practices, the question still remains how Article 2B's electronic regulation and self-help provisions fare under his "unduly tempting" standard, which acknowledges that some forms of self-help may create unacceptably high risks of abuse.118 There are good reasons to think that electronic self-help would create such risks. As Part I discussed, section 2B-310 would authorize intrusion at the licensor's sole discretion; in this, it resembles the "confession of judgment" clauses that Scott condemns as offering too great a temptation "to evade contractual risks."119 Once again, this concern is especially great for self-help unconnected to payment, and intended solely to regulate unacceptable behavior as defined by the licensor. In addition, Scott notes that distributional concerns might justify some regulation of otherwise efficient creditor self-help practices.120 To the extent that copyright's user privileges reflect such concerns, as this article argues they do, they might well justify a ban on licensor self-help that takes the form of direct electronic control of user behavior.121

A different sort of justification for creditor self-help remedies is supplied by theories that marry consent and efficiency rationales for commercial rules. Starting from essentially libertarian premises, Randy Barnett argues that rules about contract enforcement must be premised on individual consent.122 To avoid the pitfalls of subjectivism, however, Barnett contends that consent should be presumed when legal rules mirror social conventions.123 Barnett's "conventionalist" analysis resonates with the norm-based approach to commercial law, which emphasizes the interplay between law and extra-legal social ordering among groups. To these theorists, the "new law merchant" should reflect a decentralized, bottom-up approach to lawmaking that seeks to affirm existing commercial practices.124

An initial problem that confronts the use of norm theory to justify electronic self-help is that such self-help is not, as a factual matter, the ordinary practice-yet. Whether it becomes the norm will depend, in part, on how the law chooses to treat it; norms and law constitute each other in important and complex ways.125 More fundamentally, however, the notion that commercial law should be premised on market norms is deeply problematic when applied to the consumer mass market. Norms presuppose communities, and analysis of contracting behavior in the consumer mass market suggests that the community that drives the evolution of mass market norms is the community of providers. Norms also presuppose a sense of shared benefit, and community satisfaction is not necessarily the most appropriate measure for rules that affect relationships between community members and outsiders.126 Certainly, such norms cannot be said to be freely chosen by the outsiders whom they affect.127 In addition, they may be inefficient when assessed in terms of their effect on the larger society within which the community exists.128 The fact of the larger community also should cause us to question our initial identification of provider practice as the relevant norm; if, instead, we chose the community of consumers as the baseline, we probably would discover that existing social norms militate in favor of copyright user privileges.129

Historical evidence suggests that Karl Llewellyn, who first conceived the Uniform Commercial Code, sought to establish the Article 2's merchant-nonmerchant distinction precisely so that the rules governing merchants could be regularized without placing individual consumers at a disadvantage or constraining courts' equitable powers in merchant-consumer disputes involving sales of goods.130 For similar reasons, Article 9 contains provisions that afford heightened protection for individual consumers in the context of secured transactions.131 Arguably, Article 2B's distinction between negotiated and mass market licenses is more appropriate for information markets; many small businesses that Llewellyn might consider "merchants" are nonetheless consumers of mass marketed information products.132 However, Article 2B turns Llewellyn's point on its head by according less protection to mass market licensees than to parties to negotiated agreements, and the least protection to individuals who use licensed information products for personal, non-business purposes.133 This approach is consistent with the hypothesis that Article 2B reflects provider norms. That information providers as a group feel Article 2B would put them at an advantage in their dealings with consumers hardly constitutes a compelling case for its adoption.134

Still needed, then, is a standard by which to evaluate the desirability of the particular self-help regime embodied in Article 2B. Economic analysis of commercial law posits that the law of commercial transactions should focus primarily on establishing default rules that are "efficient." For some legal scholars, this means that legal rules for resolving disputes should reflect the ex ante bargains that a majority of the parties would have reached.135 Others contend that the law should sometimes set default rules differently, to encourage one or both parties to reveal information in the course of bargaining around them.136 Once again, however, the notion that a rule should mirror or encourage "bargaining" is less than useful in the mass market context, where bargaining typically does not occur on a term-by-term basis. In the mass market, consumers are contract takers; they can refuse to buy, or hold out for a lower price, but they generally cannot demand a particular package of contract terms or product characteristics.137 Thus, if the default rule under Article 2B allows electronic regulation and self-help, we would not expect to see consumers bargain around that rule in most cases-even if the rule were structured as a "penalty default" requiring actual disclosure to consumers.138 The opposite rule, disallowing electronic self-help unless authorized in a separately-negotiated agreement, probably would encourage more "bargaining," in that information providers most likely would offer lower prices to consumers willing to agree to electronic monitoring. But information providers also might offer non-monitored products at such high prices that most consumers could not or would not purchase them.139 Thus, under either rule, electronic regulation might become the prevailing approach without consumers having any real say in the matter. The problem here is not lack of "bargaining" per se, or even lack of knowledge, but rather lack of consent and inability to affect the options on the table.140 One may say many things about the results of such a system-that they reduce transaction costs, or that they promote freedom of contract for information providers-but one cannot say that they are reliable measure of what consumers want.

Another way to approach the question of private ordering of rights in creative and informational works is by asking whether such private ordering creates unacceptable costs, either for consumers or for society generally. If so, we might decide that a prohibition on the use of electronic regulation and self-help-or on their use in certain categories of disputes-should be an immutable rule.141 The answer to the question depends largely on how overall or social welfare is defined. From a purely allocative standpoint, the mass market behavior predicted above suggests that banning electronic private ordering would be inefficient. If most consumers would submit to self-help that negates their copyright privileges, that would mean that they do not value these privileges as highly as licensors value their absence. Allocative efficiency is a poor measure of social welfare, however. Social welfare is in part a function of nonmonetizable values, external effects, and distributional concerns, all of which the allocative criterion ignores.142 To decide whether the law should permit or forbid contractual exit from copyright, we must consider the particular social goals that copyright is intended to promote, and whether market transactions in private-law "usage rights" will promote them as effectively.

As I have demonstrated elsewhere, the copyright system promotes the social goals of creative progress and public access to creative works in important ways that the market cannot measure.143 Because it is difficult to assess creative potential ex ante, because there is no necessary relationship between creative potential and ability to pay, and because current information providers may perceive some works by second-comers (for example, parodies) as detrimental to their interests, there is no reason to think that giving information providers control over all uses of their information products would result in more or better creative progress.144 Even under a well-functioning regime of contractual usage rights, moreover, second-comers whose works produce substantial shared social benefits would be unable to appropriate the full value of their contributions, and would be unwilling to pay the prices demanded by existing content owners.145 In this respect, the enhanced accessibility of creative and informational works under copyright law produces important external benefits that most likely would be underproduced by a private-law, market-based regime.146 Copyright's access and use privileges, which distribute the "costs" of uncompensated uses broadly among all consumers, attempt to correct for this market failure-or, more accurately, for this failure of markets.147

In short, the copyright regime of limited rights and user privileges not only serves nonmonetizable and distributional concerns, but those concerns also are central to a particular understanding of creative and social "progress." This suggests that overall or social efficiency may well require an immutable rule prohibiting electronic regulation and self-help in at least some circumstances where private ordering threatens to disrupt the copyright balance. At the very least, the case for unfettered electronic private ordering is resoundingly inconclusive.

V. The U.C.C., Copyright, and the Public-Private Distinction

We turn now from Article 2B's doctrinal and theoretical antecedents to the question of its validity as a matter of federal copyright law and policy. Whether the self-help provisions of Article 2B implicate copyright law, or the limits imposed on copyright law by the First Amendment, turns on interpretation of the public-private distinction in the particular context of the laws that govern ownership of creative and informational works. For Article 2B's electronic rights management and self-help provisions to be valid, Article 2B must be seen to establish merely a neutral background or framework for private exchange. Indeed Article 2B is intended to establish a background framework; however, the framework is not neutral. To the extent that Article 2B is intended to give information providers the tools and the authority to contract around their limited entitlements under copyright law and into more robust entitlements of their own design, its adoption threatens to subvert completely the statutory and constitutional underpinnings of federal intellectual property law. Moreover, the process that produced Article 2B has been dominated by information provider interests to such a degree that the public-private distinction cannot credibly be invoked to shield their conduct.

A. Preemption and the "Dormant Intellectual Property Clause"

The public-private distinction mediates the relationship between copyright and contract in several different ways. First, as discussed in Part II, it helps to define the scope of preemption under section 301 of the Copyright Act. Section 301 preempts state-created rights in the subject matter of copyright that are "equivalent" to the rights afforded by copyright.148 It is fairly clear that Congress did not intend section 301 to preempt many private contracts relating to works falling within the subject matter of copyright-for example, agreements authorizing book publication and distribution, or authorizing the public display of copyrighted films.149 That does not end the matter, however. Some "contracts" closely resemble universally-applicable proprietary rights. In particular, standard-form, mass market "licenses" for creative and informational works elide the boundary between property and contract.150 Any state that adopts the electronic regulation and self-help provisions of Article 2B should recognize that it is authorizing the implementation of quasi-proprietary regimes that will affect thousands and even millions of consumers.

Even if contracts as a class are outside the scope of section 301, though, the electronic regulation and self-help provisions of Article 2B fall afoul of the general principle, embodied in the Supremacy Clause, that a state-created regulatory regime cannot undermine federal law.151 Here, the federal law in question is both statutory and constitutional.

The Supreme Court has issued conflicting pronouncements as to whether it will find implied preemption when the federal statute in question contains an express preemption provision that does not cover the challenged action.152 Most recently, however, it has suggested that a narrow preemption provision merely establishes a rebuttable presumption of Congress' intent not to preempt.153 The conflict between Article 2B and the Copyright Act presents a strong case for finding such a presumption rebutted. It is clear that when Congress enacted section 301 as part of the Copyright Act of 1976, it did not consider the possibility of state legislation designed to enable self-enforcing digital contracts that would enable the wholesale displacement of copyright.154 And, as discussed above, authorizing information providers to define the scope of their entitlements would materially undermine the social objectives that the Copyright Act is intended to promote. The Court's preemption decisions establish as much. Although the Court has held that states may grant protection to potentially copyrightable works that Congress has not chosen to protect,155 it has also held that they may not grant property-like rights in unprotectable inventions, although they may afford a lesser level of protection.156 On the same reasoning, nor may they confer property-like rights in unprotectable (as opposed to merely unprotected) works, or in unprotectable aspects or components of otherwise copyrightable works.

Ultimately, however, the determination of conflict is not Congress' to make. Neither the copyright objectives nor the limitations on copyright ownership designed to promote them are legislatively-determined. Both are required by the language of the Intellectual Property Clause of the Constitution, which authorizes Congress to grant "exclusive Right[s]" only to "Authors and Inventors" for "their respective Writings and Discoveries," and only for "limited Times."157 To qualify as a patentable invention under this standard, an innovation must represent a nonobvious advance over the prior art; to qualify as a copyrightable "writing," an expression must attain a minimal level of originality.158 Consistent with these requirements, the Intellectual Property Clause prohibits copyright protection for facts, ideas, methods of operation, and other elements of "writings" that do not in themselves constitute original expression.159

Congress, of course, has other sources of power. In particular, it may use its commerce power to grant certain types of rights in intellectual creations; the Lanham Act is one such example.160 However, the commerce power is plenary only up to a point; it may not be exercised in a manner that ignores other, more specific constitutional constraints.161 Thus, Congress may not invoke the commerce power to do what the Intellectual Property Clause bars it from doing: granting "exclusive Right[s]" in unpatentable or uncopyrightable subject matter.162 Nor may it invoke the commerce power to authorize the states to grant such rights.163 Congress, in short, could neither enact nor authorize the provisions of Article 2B that allow information providers to grant themselves exclusive rights in uncopyrightable content, and to extend their exclusive rights in copyrightable expression for unlimited times.

Where Article 2B is concerned, the relevant question is how these limits on Congress' power bear on what the states may do on their own. Here the plot thickens, for the Court has held that the Intellectual Property Clause does not bar states from enacting their own forms of intellectual property protection, even for works otherwise patentable or copyrightable.164 But it has never held that the states may offer protection that conflicts with the constitutional scheme, and indeed, on the terms of its own preemption decisions, it could not. The statutory limits that required preemption in those cases are positive constitutional mandates as well. The Intellectual Property Clause denies protection to certain subject matter precisely so that it may remain in the public domain, available to all comers.165 It follows that where unpatentable know-how and uncopyrightable facts or principles are concerned, the same restrictions that bind Congress also bind the states.166 Any state adopting Article 2B should recognize that it effectively allows information providers to opt out of those restrictions, thereby frustrating constitutional policy.

B. Speech Harms and the First Amendment

The public-private distinction also demarcates the boundary between private disputes about infringement and public regulation of speech. This observation is commonplace as to tort law. Private parties may sue for defamation, but the state may not structure its law of defamation to chill speech on matters of public concern.167 Because copyright also implicates First Amendment concerns, the same analysis applies. Private parties may sue for infringement, but neither Congress nor the courts may define the law of infringement in a way that tramples on speech. In particular, the Court has indicated that the idea-expression distinction and the fair use doctrine-and the public domain that these limitations on copyright ownership guarantee-are necessary adjuncts of a statute that creates proprietary rights in expression.168

Even if the Intellectual Property Clause did not constrain Congress' power to grant "exclusive [r]ights" in intellectual creations, Congress could not erase these First Amendment-based limitations on copyright's reach. Similarly, even if no "dormant Intellectual Property Clause" binds the states, no state could establish a regime of proprietary rights in information that ignored First Amendment boundaries. Sections 2B-310 and 2B-715, in contrast, appear to stand for the proposition that private information providers may use non-negotiated, digital standard forms to enforce prohibitions on a broad range of speech activity, ranging from the traditional (criticism, educational discussion, and commentary on the news of the day) to the less so (reverse engineering of software).169 Any state adopting Article 2B should recognize that widespread adoption of these practices would significantly undermine the First Amendment's guarantees.170

C. Private Enforcement and Due Process

Finally, the public-private distinction determines what procedures may be used to enforce contract rights. The Supreme Court's procedural due process decisions make clear that a state-aided seizure of licensed information products, as authorized under section 2B-715 of Article 2B, would require certain pre-deprivation safeguards.171 Yet in Flagg Brothers, Inc. v. Brooks,172 the Court held that a private warehouse that had been storing the plaintiff's household goods was not required to provide a hearing before selling the goods to satisfy her account, even though a provision of the U.C.C. adopted by the state authorized the sale. Private self-help repossession, in short, does not involve "state action" and thus is subject to fewer procedural constraints than enforcement via judicial process.

As Flagg Brothers suggests, the argument that Article 2B merely will establish neutral background rules for private exchange comports with a well-established (though much-criticized) understanding of the public-private distinction.173 However, sections 2B-310 and 2B-715 do far more than simply reshape the private law of contract to accommodate the unique characteristics of information products. Any state adopting Article 2B should recognize that the proprietary regimes Article 2B authorizes likely will rely heavily on electronic self-enforcement, and even more heavily on electronic "regulation of performance" ex ante. As a result, the definition of "informational rights"-which, until now, has occurred largely via the judicial enforcement process-will be insulated from public oversight. Article 2B does not merely provide default rules for the private sector; rather, it works a radical reconceptualization of what "private" encompasses.

D. Private Interests and Public Acts

Finally, it is worth noting that Article 2B in fact constitutes a hybrid species of action, both public and private, that the conventional understanding of the public-private distinction does not contemplate. Article 2B is (or will be, if enacted) public action at the behest-and, some would argue, the direction-of particular private interests.174 Public-choice analysis of Article 2B is complicated by the involvement of the National Council of Commissioners on Uniform State Laws and the American Law Institute in the U.C.C. drafting and approval process. However, pioneering efforts to model the decision-making patterns of "private legislatures" such as the NCCUSL and the ALI suggest that their involvement makes the U.C.C. process more, not less, subject to capture.175

Systematic exploration of whether and how the phenomenon of legislative capture should affect judicial characterization of state laws modifying traditionally private-law regimes is well beyond the scope of this article. Nonetheless, one of the primary rationales for the public-private distinction-that laws governing private transactions merely establish a neutral, background framework for private bargaining-is significantly weakened when public power is coopted to serve a private agenda. The resulting law is neither "neutral" nor "background;" it is a partisan instrument undertaken to serve a specific purpose. The realist-inspired challenge to the conventional understanding of the public-private distinction holds that the state always chooses.176 One need not accept that conclusion to see that when the state enters a private dispute as captive or agent of an affected interest, rather than as "neutral" arbiter, there is a much stronger argument that it should bear responsibility for the result.


The question that Article 2B poses is this: May the states reshape their law of contract to allow automatic, self-enforcing foreclosure of conduct privileged by copyright law and, ultimately, by the Intellectual Property Clause and First Amendment, given that they may not reshape their tort law or their trade secrecy law to produce a similar result? I have suggested that the answer must be no. Whatever the force of arguments that private enforcement of private contracts does not constitute state action, the same arguments cannot apply to state legislation designed largely to authorize private information providers to opt out of the framework of proprietary rights and exceptions established by federal copyright law and mandated (in broad brush) by the Constitution. Put differently, the states should not be able to set default rules that invite information providers to override exceptions that lie at the core of the federal copyright balance.177 By conferring on information providers the authority to displace federal copyright law, sections 2B-310 and 2B-715 of Article 2B constitute a deliberate usurpation of Congress' role in defining and enforcing the scope of protection in creative and informational works. By any standard-and certainly if the limitations on copyright ownership are to continue to have any meaning in the market for digital works-this is a public act that the Intellectual Property Clause and the First Amendment should not permit. Part VI contends, instead, that copyright law and policy require quite a different approach to electronic self-help in information markets.

VI. Restoring the Balance: the Case for Licensee Self-Help

Courts may, and should, apply principles of preemption and freedom of speech to invalidate license terms authorized by Article 2B that are inconsistent with copyright limitations.178 Because of the self-enforcing nature of digital rights management technologies, however, relying exclusively on these principles to cure Article 2B's excesses would be unwise. The restrictions authorized by sections 2B-310 and 2B-715 are intended to operate automatically, and in many cases without advance disclosure.179 These provisions shift the burden of initiating litigation to the licensee, who in many cases will be poorly equipped to bear it. It is not clear, moreover, what copyright-based cause of action a licensee could assert.180 Restoring the copyright balance requires procedural as well as substantive measures. Specifically, it requires that rights of self-help be extended to licensees.181

Of course, Article 2B does not leave information consumers wholly without recourse to challenge information providers' electronic regulation and self-help practices. Electronic regulation of performance "that prevents use permitted by the agreement" constitutes a breach, as does electronic self-help repossession in violation of the restrictions imposed by section 2B-715.182 If a consumer wishes to file suit, Article 2B provides the usual assortment of contract remedies.183 In addition, in any case involving electronic self-help repossession, section 2B-715 affords the licensee the right to an expedited post-seizure hearing.184

Nonetheless, Article 2B is not a consumer protection statute, and plainly, the drafters do not intend it to be one. Edward Rubin has criticized the U.C.C. for establishing remedial processes that systematically disadvantage consumers.185 Rubin decries the U.C.C.'s use of a common-law institutional model for enforcement of consumer remedies as inappropriate given the expense and complexity of litigation, and given the incentives created for merchants, as repeat players in the litigation process, to litigate disputes aggressively for strategic reasons.186 In a similar vein, Jean Braucher suggests that the uncertainty that surrounds judicial application of the "breach of the peace" standard and the minimal damages typically awarded to successful debtor plaintiffs deter lawyers from agreeing to represent debtors in wrongful repossession suits.187 Both Rubin and Braucher argue that effective consumer protection requires inexpensive, accessible procedures and incentive-shifting remedies such as statutory damages and attorneys' fees.188

One avenue of recourse for consumers of mass marketed information products might be the Federal Trade Commission, which has broad jurisdiction over "unfair or deceptive acts or practices in or affecting commerce."189 Licenses for information products, which implicate federal copyright interests as well as interstate commerce, fall squarely within the class of transactions with which the FTC is properly concerned. Thus, for example, we might expect the FTC to take an interest in Article 2B's provisions and information providers' practices relating to disclosure and disclaimer of warranties-and, if necessary, to request that Congress extend the specific protections afforded under the federal Magnuson-Moss Warranty Act to information products.190 In the case of electronic self-help, we would expect the FTC to take an interest in licensor practices relating to disclosure of terms, and to care whether consumers are given adequate notice of the possibility of electronic self-help and the conduct that will trigger it.191

The FTC, however, has neither the jurisdiction nor the expertise to preserve the substantive balance mandated by federal copyright law. Here, Rubin's analysis hints at another option for consumers. Rubin suggests that the law might partially "correct[] the imbalance" inherent in the civil litigation process by allowing consumers to use certain self-help remedies, thereby shifting to merchants the burden of initiating litigation.192 His analysis applies with even more force to Article 2B, because the addition of self-enforcing technological restraints to information providers' arsenal of enforcement measures produces an even greater imbalance.

In the case of sections 2B-310 and 2B-715, the greater worry is not that information providers will breach their "contracts" with licensees, but that they will honor them, thereby stripping licensees of the privileges they enjoy, and have come to expect, under the public law of copyright. Jane Ginsburg has suggested that in some circumstances the law might afford licensees who engage in contractually-prohibited conduct that is permitted by copyright a "right of fair breach."193 That is fine as far as it goes, but an abstract right of breach may count for little in the face of self-enforcing technological protection. I propose to extend Ginsburg's suggestion even further: If the user privileges established by copyright, and necessary to ensure that proprietary rights in expression do not frustrate First Amendment freedoms, are to mean anything, users must be afforded affirmative rights to protect themselves. A "right of fair breach" is meaningless unless it includes a right to effectuate the breach-a right to hack the digital code that implements and enforces the challenged restriction.

Larry Lessig has characterized digital code as "privatized law"-"law that need not fit with, or respect, public law," but instead may undermine values that public law has attempted to protect.194 With respect to rights management code, at least, this is both true and false. Code constitutes itself as an inexorable arbiter of permissible conduct.195 In this, as Lessig observes, it is not really "contract" at all; rights denominated "contract" are themselves subject to public policy limits.196 Yet rights management code is, at the same time, simply the physical instantiation of desired contract restrictions.197 If information providers may not contract around copyright- and First Amendment-based limits on information ownership, it follows they also may not invoke code as an independent legal basis for avoiding those limits.198 To the extent that copyright overrides inconsistent contract provisions, it supplies a defense for licensees who disable the protective code in order to commit electronic breach. The corollary to Lessig's observation, in short, is that public law need not respect inconsistent code.199

Licensees who hack, of course, face the prospect that they will be sued and their actions judged infringing.200 But this is the ordinary rule; the right to challenge a rule of law by violating it is sacred, but the individual disobeys the law at his or her peril. In the case of digital rights management systems, recognizing a right of self-help for licensees simply reaffirms the balance between authors and users, and between information ownership and the public domain-a balance that Article 2B threatens to distort beyond recognition.201

VII. Conclusion

The electronic rights management provisions of Article 2B represent bad policy, bad theory, and bad law. Allowing electronic intrusion into private homes and offices, and into private computer systems maintained there, would grossly violate established principles of privacy; would empower private information providers to decide a dangerously broad range of factual and legal disputes; and would enable complete displacement of the copyright framework of limited entitlements and user privileges. There is no tenable theoretical justification for according information providers such sweeping authority. To the contrary, copyright's user privileges are constitutionally mandated. A state law that seeks to enable information providers to opt out, en masse, from the copyright system cannot, and should not, be saved by ritual invocation of the public-private distinction. For the same reasons, the technologies that implement this exit cannot, and should not, be protected against private acts of resistance designed to preserve the copyright balance.