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September 18, 2007
Fashion and piracy
Earlier this month, I posted a piece on how fashion designers are seeking intellectual property protection fro their designs. In that posting I ended by asking the following tough, or what I thought were tough, questions:
Unfair counterfeiting or healthy competition? Stifling creativity or encouraging it? Good for consumers or bad for consumers?
James Surowiecki in this week's New Yorker (issue dated Sept 24) answers those questions and argues why protecting fashion designs might be the wrong thing to do - The Piracy Paradox:
Designers’ frustration at seeing their ideas mimicked is understandable. But this is a classic case where the cure may be worse than the disease. There’s little evidence that knockoffs are damaging the business. Fashion sales have remained more than healthy—estimates value the global luxury-fashion sector at a hundred and thirty billion dollars— and the high-end firms that so often see their designs copied have become stronger. More striking, a recent paper by the law professors Kal Raustiala and Christopher Sprigman suggests that weak intellectual-property rules, far from hurting the fashion industry, have instead been integral to its success. The professors call this effect “the piracy paradox.”
The paradox stems from the basic dilemma that underpins the economics of fashion: for the industry to keep growing, customers must like this year’s designs, but they must also become dissatisfied with them, so that they’ll buy next year’s. Many other consumer businesses face a similar problem, but fashion—unlike, say, the technology industry—can’t rely on improvements in power and performance to make old products obsolete. Raustiala and Sprigman argue persuasively that, in fashion, it’s copying that serves this function, bringing about what they call “induced obsolescence.” Copying enables designs and styles to move quickly from early adopters to the masses. And since no one cool wants to keep wearing something after everybody else is wearing it, the copying of designs helps fuel the incessant demand for something new.
Here is the description from Raustiala and Sprigman's article in The New Republic in August -
How Copyright Law Could Kill The Fashion Industry:
The fashion industry responds to our desires by churning out new designs at a rapid clip. But fashion designers don't maroon themselves on a desert island to create their work. Designers pay close attention to the work of their peers, and they love to mine the past for ideas. When they see something that they like, they copy it--or, in the argot of the industry, they "reference" it. That doesn't mean that they copy point-for-point, although sometimes they do. Much more often, designers take an element of an attractive design, work with it, and turn out something that is in the same style but not identical. Flip through any major fashion glossy and you will see what we mean. In the fashion industry's copyright-free zone, designers and fashion firms are free to take a design they like, put their own creative spin on it, and jump on board what they hope will be a money-maker.
The result is the fashion industry's most sacred concept: the trend. Copying makes trends, and trends are what sell fashion. Every season we see fashion firms "taking inspiration" from others' designs. And every season we see trends catch on and have a moment of wide appeal, only soon to become overexposed and then die. This fashion cycle is familiar; what is less commonly recognized is that it is accelerated by longstanding legal rules that allow designers to mimic, play with, and improve upon their competitors' designs.
By allowing the copying of attractive designs, current law fits well with the industry's basic mission--to set new fashion trends and then convince us to chase them. And the trend-driven copying of attractive designs ensures that those designs diffuse rapidly in the marketplace. This, in turn, makes the early adopters want a new style, because nothing is less attractive than seeing your carefully chosen clothes on the backs of the hoi polloi. In short, copying is the engine that drives the fashion cycle.
Their full paper, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, was published in the Virginia Law Review last summer. It is a much more extensive discussion, including such tidbits as how Burberry uses its trademarked distinctive plaid as a means of protecting its designs and how Dooney & Bourke was able to use Louis Vuitton’s distinctive repeating “LV” design by substituting “DB” instead. They also have this to say of the EU system of registered designs:
Europe thus presents a situation of pervasive but unutilized regulation. Despite a regime that permits registration of designs, few choose to register. If design protection were an important element of success for fashion firms competing in the European Union, we would expect to see a higher rate of registration under the E.U.-wide scheme, both because registration in the E.U. database provides a unitary right that applies across all twenty-five member countries, and because the law of the European Union provides patent-like protection that simply proscribes any subsequent design that is substantially similar to the registered design. As a result, if fashion firms competing in the European Union valued design protection, the current legal system would strongly incentivize registration in the E.U. database.
It nonetheless could be argued that the low registration rate might simply suggest that fashion firms are content with national design protection laws, but the industry does not appear to make much use of the national laws either. The United Kingdom has a statute, the Registered Designs Act of 1949, which establishes rights in registered industrial designs and includes protection for registered apparel designs. Our search of this U.K. database104 yielded results similar to what we found for the E.U.-wide registry—few designs are registered.
This suggests that in the quickly changing fashion industry, design registration and lawsuits to enforce that protection are seen as not worth the effort.
The difference between the regimes in the United States and the European Union creates a natural experiment: one would expect to observe some difference in the industry’s conduct or perhaps variances in industry outcomes on each side of the Atlantic. More pointedly, if strong IP protection were a sine qua non of investment and innovation in fashion design, we would expect to see the European industry flourish and the U.S. industry stagnate. Yet, we observe no substantial variances in conduct. Instead, we see widespread design copying in both the European Union’s high-IP environment and America’s low-IP environment. That fashion firms do not exhibit marked differences in behavior despite these very different legal environments is consistent with our claim that the industry operates profitably in a stable low-IP equilibrium. For E.U. fashion firms that wish to stop copyists, the law is in place. Yet in practice, designers rarely employ E.U. law to punish copyists.
Raustiala and Sprigman end their paper with a description of numerous industries which have their own variation on intellectual property protection - some strong, some weak. That discussion should raise an important question about the design of an IP system as a one-size-fits-all. Arguments have been made during the recent patent reform legislation about the importance of maintaining a unitary patent system. But there are clearly differential effects -- most notably on the drug versus IT industries. There are industries, such as fashion, which have thrived in a different system. And there are IP protections crafted specifically for a single industry -- such as semiconductor chip masks and boat hull designs.
Given this, isn't it time to have a serious discussion about an intellectual property system that can take into account the complexities of the I-Cubed Economy? Some of those discussion have taken place -- such as a 2006 conference at the University of Michigan on Patents and Diversity in Innovation. But the debate has not yet entered the political sphere. It should.
Posted by Ken Jarboe at September 18, 2007 08:26 AM
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