'The New Things: Property Rights In Digital Files?' by Johan David Michels and Christopher Millard in (2022) Cambridge Law Journal considers
the property status of digital files, such as electronic documents, under English law. We argue that, while mere information is rightly not considered property, digital files are not mere information. Instead, they are distinct virtual objects that exist at the logical – or software – layer of a computer system. Property law could recognise digital files as a new, third kind of thing, alongside things in possession and in action. Doing so might help resolve disputes over access to digital files, by providing proprietary remedies similar to those available for paper documents.
The authors state
Suppose company A creates an electronic database of its customers and stores the digital file on the servers of cloud provider B. A owns its own computer and any intellectual property (“IP”) rights in the database content. B owns the servers and has practical control over the digital file. What about legal rights to the file itself: the collection of information stored on the server? Is that A's property? What if B refuses to let A access the file? Can A then call upon a proprietary remedy?
In this paper, we look at the property status of digital files, such as electronic documents, emails, and photographs, under English law. The topic is complicated. The concept of property can be “peculiarly difficult to define or even to describe”.
Further, whether an object qualifies as property depends on the legal context. As Lord Porter remarked: “‘property’ is not a term of art but takes its meaning from its context and … the document or Act of Parliament in which it is found.”
Applying this complex legal concept to ever-changing information technology (“IT”) is challenging. We aim to identify the relevant challenges and suggest possible solutions. We start by reviewing two possible objections to treating digital files as property. First, mere information is not property under English law. Yet digital files are not mere information. Instead, they are virtual objects that differ in relevant ways from the information they contain. Second, digital files do not fit the traditional categories of things recognised as property under English law. Nonetheless, digital files could be considered a new, third kind of thing, in line with the emerging treatment of cryptocurrencies.
In our view, recognising property rights in digital files is appropriate where: (1) their characteristics make them a good fit for property law; and (2) policy reasons support extending property rights in a given legal context. We focus on commercial law and argue that property rights could help resolve commercial disputes over interference with access to a digital file. An example would be where a cloud provider excludes a customer from a digital file which the customer has uploaded to the cloud. Property law would provide the customer with a remedy to recover the digital file, as it does for paper documents. With the Law Commission of England and Wales currently reviewing the legal status of digital assets, now is the time to consider the case for property rights in digital files.
II. The Boundaries of Property: Beyond “Mere Information”
A. Mere Information Is Not Property
English law does not recognise information itself as property.
Sir John Mummery explained this using the example of a letter as follows:
(1) The physical sheets of paper are the property of the purchaser. When the letter is sent, property in the paper passes to the recipient. (2) The written composition contained in the letter is treated differently. That is owned by the author, in the form of a copyright. The recipient comes to own the paper, but not the copyright in the written work, which the author retains. (3) In contrast, the information contained within that composition (the ideas, facts, etc.) is not regarded as property. It is free for anyone to use.
Floyd L.J. similarly considered that:
the law has been reluctant to treat information itself as property … there are sharp distinctions between the information itself, the physical medium on which the information is recorded and the rights to which the information gives rise. Whilst the physical medium and the rights are treated as property, the information itself has never been.
Depending on the circumstances, information can be subject to other, non-proprietary rights. For example, the recipient can have an obligation of confidentiality, which protects information from being disclosed or used for other purposes. Such an obligation can be imposed expressly by contract or impliedly. Alternatively, it can arise as an equitable duty from the relationship between the parties and the nature of the information. Yet any such obligations are enforceable against another party only as a personal matter; they are not based on property rights.
There are three main reasons why information is not regarded as property, namely: (1) that doing so imperils free speech; (2) that information is a poor fit for property rights; and (3) that property rights are unnecessary.
