Pliability rules

In the thirty years since Calabresi and Melamed's seminal Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, scholars have divided protection for legal entitlements into two major types: property rules and liability rules. In this Article, we uncover an overlooked, but crucial third type of legal protection: pliability rules. Pliability rules combine the features of property rules and liability rules, either sequentially or simultaneously. Pliability rules are thus ideal for situations where a legal entitlement must cope with changing circumstances, conflicting policy goals or the inherent limitations of property and liability rules. The Article serves three goals. Conceptually, we show that pliability rules are ontologically distinct from their familiar cousins, and create different effects on incentives and distribution. Descriptively, we demonstrate that while the academy has overlooked them, pliability rules already affect such diverse legal fields as property, antitrust, corporate law and intellectual property. And, normatively, we uncover ways in which pliability rules can revolutionize the patent system and eminent domain jurisprudence, solve anticommons problems and provide a valuable prism to understand the law of bankruptcy.