Notorious “Pharma Bro” Martin Shkreli, the former hedge fund manager who infamously raised the price of Daraprim from $13.50 to $750 per pill, is currently serving a seven-year sentence for securities fraud. His sentencing also included a $7.3 million fine. In order to satisfy this extravagant penalty, a federal judge authorized – pending appeal – the seizure of several of Shkreli’s prized possessions, including a Picasso painting, unreleased material from rapper Lil’ Wayne, and a one-of-a-kind gold Wu-Tang Clan album called Once Upon a Time in Shaolin.

Shkreli bought the Wu-Tang album for a reported $2 million at an auction in Morocco. The sale reportedly included several contractual limitations on Shkreli’s use of the album; for instance, he was forbidden from releasing the album commercially for 88 years. Putting aside the actual legality of such a clause, the premise seems simple: Shkreli has an apparent future interest in the copyright of the songs on the album, in addition to a present interest in the album itself.

This naturally leads to an interesting question: if the government seizes Once Upon a Time in Shaolin, does it also seize that future interest? Put plainly, can the government seize intellectual property?

Perhaps the most aptly analogous cases to consider in this context involve a motorcycle gang called the “Mongols Motorcycle Gang,” whose trademarked insignia has been the subject of several seizure attempts in California. The first attempt was rebuffed on a technicality; only a few individual members of the gang had been charged with RICO violations, so a trademark belonging to the gang as a whole could not be seized. This oversight was remedied in a subsequent RICO case filed against the entire gang. The case made it all the way to the 9th Circuit, which remanded without reaching the issue of whether the government could actually seize the gang’s trademarks. It seems that the best answer to the question of whether the government can seize intellectual property is a resounding “maybe.”

It may be simpler to ask why the government would want to seize IP rights in the first place. They are, after all, “negative rights,” with no inherent value. Copyright holders, for example, can forbid others from reproducing or distributing works; trademark holders can prevent others from confusing customers by mimicking their symbols. The government probably would not want to go through the effort of extracting value from these negative rights.

So if you’re on the market for a one-of-a-kind Wu-Tang Clan album, and the government just so happens to have one up for auction in the near future, don’t worry – even if the government has inadvertently seized the copyright to the music on the album, it’s unlikely it will enforce those rights against whoever buys it.

Josh Myers

 

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