Digital Property

5 min read

Due to the increasing use of personal data, the value of what we want to own has changed significantly over the last 20/30 years.

Digitisation:

Digitisation is ‘the move from atoms to bits’ [1]

The ‘Information Society’:

We live in a society that creates a relationship between humans and computers.

Using binary, the digital world does not have analogue drop-off / signal deprivation and any informational product may be digitised. [2]

Computerisation vs Digitisation:

Computerisation is using computers to store and process information.

Digitisation is the process of reducing information to digital or binary data.

Computerisation is a tool; digitisation is a cultural and social change.

Change to Digitisation (Atoms to Bits):

Traditionally, property was focussed on atomic things (things you could touch and physically possess). In the modern world, ideas of property have changed to include digital assets too. Value is now seen in bits, whereas value was traditionally only seen in atoms.

Atoms in the universe are limited and can be used in the physical world to construct anything, but bits are the basic building blocks of the ‘information society’.

Many companies now trade exclusively online. [3] While some solely work on a digital medium, others operate a hybrid between atom and bit transactions. [4]

These changes represent a shift from ownership and/or control of things to ownership and/or control of information.

Relationship with Property:

Real World Items / Traditional Tangible Property:

Real things have economic value because they are limited, costly to manufacture and have status.

Uniqueness:

While there may be multiple of the same item in existence, there is only one which is actually yours. This is innately linked to the nature of how physical things are all limited. EG: there are many pens, but only one pen is actually your pen.

Rivalrous:

A physical object can only be in one place at one time. EG: if you are in possession of your pen, another person cannot be at the same time.

The law reflected economic realities, which placed value on things. The law still, to a certain extent, assumes rivalrousness and uniqueness. [5] EG: stealing was an offence, but copying didn’t come into force until much later.

Digital information is infinitely scalable, non-rivalrous and intangible. This makes it different from traditional property and means that traditional understandings of property are insufficient.

Value in Intangibles:

Property rights began to be attached to intangible things during the enlightenment period. [6] At first this only protected authors, but extended to cover a broader array of intangibles over the years.

Debate:

Some have argued that intangibles, such as ideas, cannot be objects of property because they are non-rivalrous.

‘If nature has made any one thing less susceptible than all other so exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening mine’. [7]

Wine and Bottles Argument [8]:

Barlow argued that, in the atomic world, ideas are protected by indirect controls. It is the control of physical production that was protected, not the intellectual output. Metaphorically speaking, putting the wine in the bottle to protect it.

However, in the digital world there are no physical carriers to protect (disintermediation), so traditional copyright rules are undermined and ineffective. Metaphorically speaking, there is no bottle to protect the wine.

Barlow argues that society is attempting to use traditional understandings of property law in a digital environment. This is doomed for failure. Once again metaphorically speaking, the contents of the bottle can now be traded without the bottle itself.

Theories based on Locke’s theory of possessive individualism, economic efficiency and distribution cannot successfully exist in the digital world.

Changes in Relationship to Property:

Ownership vs Licencing:

There has been a noticeable move from an ownership model to a licencing model.

The licencing model confers limited rights: while we have a right to access the digital content we buy, we do not have the right to sell it on or a right to keep it permanently (by revoking the licence). [9]

Digital Property and Death:

Unlike physical property, digital property often cannot be passed on post-mortem.

Can there be ‘Informational Property’?

Cyber Trespass:

Claims were brought around cybertrespass to chattels. The claim was founded on the idea that there was a rivalrous attempt to use someone else’s property, breaching their ownership rights. Since the servers were physical property and the information stored on them was being used in unauthorised ways, this was cybertrespass.

These claims were not very effective and rejected by the courts. [10]

‘Bitproperty’ [11]:

Fairfield separates property and property rights. Property is the ‘informational signpost’ of who has the property rights. This fits in the idea of owning digital things.

Rivalrousness and scarcity of resource is a bug, not a feature, of property rights. They are not needed for property rights to exist, but they are just assumed due to the nature of traditional property.

Ownership of property is to say that the owner has the unlimited right to exercise their property rights according to law. Even if these rights are unknown or forgotten, they still exist.

Property rights are assumed to be modular. EG: if you own a bike, you also own the wheels, chain etc. Furthermore, you could replace every part of the bike over time (so it is in no way the same as the original), bit it is still yours. It is simply assumed that you own every part of the bike for informational efficiency.

NFTs are an example of bitproperty / crypto property. Ownership is generally not protected or enforced by a centralised body or the courts even though this would be fairly easy to implement. [12]

Resources:

References:

[1] Nicholas Negroponte, Being Digital (Alfred A Knopf Inc. 1995) [2] EG: using ASCII; EG: Music, Films, Print Media, Home Entertainment / TV, Communications, Photography / Videography etc. [3] EG: Amazon, eBay, Google, Apple, Netflix, Spotify, Meta / Facebook etc. [4] Compare Amazon which uses a digital medium and transaction to facilitate a physical sale with Netflix which solely uses a digital medium. [5] See Theft Act 1968 [6] First Copyright Act: Statute of Anne 1710 [7] Thomas Jefferson’s Letter to Isaac McPherson [8] John Perry Barlow, ‘The Economy of Ideas’ Wired (1st March 1994) [9] See Kindle Books Terms and Conditions [10] Intel Corp. v. Hamidi 30 Cal. 4th 1342 (2003) [11] Joshua A.T. Fairfield, ‘Bitproperty’ 88 Southern California Law Review 805-874 (2015); Joshua A.T. Fairfield, Owned: Property, Privacy, And The New Digital Serfdom (Cambridge University Press 2017) [12] Note: Discussions within the Bank of England and the Law Commission