Also known as:proprietary rights · property right · proprietary interest
Written by attorneys · grounded in primary & secondary sources — see below
A legally protected interest in property or a financial stake that confers enforceable rights of control or benefit. The interest may attach to tangible assets, intangible rights such as identity or causes of action, or litigation outcomes when a party exercises practical dominion.
Sources & Authorities
How it applies
Common Examples
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Lawyer Stakes Claim in Client Suit
Patrick Phan, a solo practitioner, advanced living expenses to his client Pierce Patterson during pending contract litigation and secured a written promise for twenty percent of any recovery. The arrangement gave Phan a direct financial stake in the outcome of the very case he was conducting. Because the stake exceeded authorized liens or contingent fees, the agreement violated the prohibition on acquiring a proprietary interest in the subject matter of litigation.
Nonparty Controls Prior Suit
Prosperity Investments financed and directed every strategic decision in an earlier suit brought by one of its portfolio companies against a municipal fee schedule. After the portfolio company lost on the validity of the fee calculation, Prosperity later sought to relitigate the identical methodology in its own refund action. Because Prosperity possessed both a direct financial stake and practical control over the first litigation, the prior determination bound it under issue preclusion.
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Cases
Statutes
Uniform Acts
Model Codes
Restatements
Dictionaries
Unauthorized Commercial Use of Name
Premier Manufacturing printed Phuong Pham's life story and likeness on product packaging to promote a new line of tools without obtaining consent. Pham had never authorized the use and received no compensation. The unauthorized exploitation of Pham's identity for commercial gain gave rise to liability for misappropriation of a proprietary right in her name and likeness.
Notice of Property Interest
Pacific Bank held a mortgage on real property whose owners could not be located after a trust dispute. The bank published notice of foreclosure proceedings in a local newspaper. Because owners typically monitor attacks on their possessory or proprietary rights, the publication satisfied due-process requirements for parties with known property interests in the state.
Copyright as Proprietary Stake
Preston Pratt, an author, sold the exclusive right to publish his manuscript to Harper & Row. When The Nation printed substantial excerpts before authorized release, the publisher sued for infringement. The copyright constituted a proprietary interest that the unauthorized pre-publication use directly invaded.
Right of Publicity in Performance
Pablo Perez, a human cannonball performer, contracted with a county fair for exclusive rights to his act. A television station broadcast the entire performance without permission. The broadcast appropriated Perez's proprietary interest in the commercial value of his unique performance, supporting a right-of-publicity claim.
Common questions
Frequently Asked
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Does a lawyer violate the rule by taking a percentage of a client's recovery in exchange for advancing ordinary business expenses?+
Yes. The prohibition bars any proprietary stake in the cause of action or subject matter of litigation the lawyer is conducting for a client. Advances limited to court costs or litigation expenses may be permitted under narrow exceptions, but payments covering rent or payroll create an unauthorized financial interest that the rule forbids.
Supporting sources
When does a nonparty's financial stake in earlier litigation trigger issue preclusion?+
Issue preclusion binds the nonparty when it assumed control over the prior action and possessed a direct financial or proprietary interest in the outcome. The determination must have been actually and necessarily decided by a court of competent jurisdiction.
Supporting sources
What interest does the tort of misappropriation protect?+
The tort protects an individual's proprietary right in the commercial use of name, likeness, or life story. Unauthorized exploitation for the defendant's benefit gives rise to liability even without defamation when the use unjustly appropriates that interest.
Supporting sources
17 U.S. (4 Wheat.) 316 (1819)Business Associations
…by the real property of the Bank of the United States in common with other real property in a State, nor to a tax imposed on the proprietary interest which the citizens of that State may hold in this institution in common with other property of the same description throughout the State. Opinion of Chief Justice Marshall This was…