[Ip-health] The Piracy Paradox: Innovation and Intellectual Property in Fashion Design

[Ira Glazer]

*Abstract:

The orthodox justification for intellectual property is utilitarian.
Advocates for strong IP rights argue that absent such rights copyists
will free-ride on the efforts of creators and stifle innovation. This
orthodox justification is logically straightforward and well reflected
in the law. Yet a significant empirical anomaly exists: the global
fashion industry, which produces a huge variety of creative goods
without strong IP protection. Copying is rampant as the orthodox account
would predict. Yet innovation and investment remain vibrant. Few
commentators have considered the status of fashion design in IP law.
Those who have almost uniformly criticize the current legal regime for
failing to protect apparel designs. But the fashion industry itself is
surprisingly quiescent about copying. Firms take steps to protect the
value of trademarks, but appear to accept appropriation of designs as a
fact of life. This diffidence about copying stands in striking contrast
to the heated condemnation of piracy and associated legislative and
litigation campaigns in other creative industries.

Why, when other major content industries have obtained increasingly
powerful IP protections for their products, does fashion design remain
mostly unprotected - and economically successful? The fashion industry
is a puzzle for the orthodox justification for IP rights. This paper
explores this puzzle. We argue that the fashion industry
counter-intuitively operates within a low-IP equilibrium in which
copying does not deter innovation and may actually promote it. We call
this the piracy paradox. This paper offers a model explaining how the
fashion industry's piracy paradox works, and how copying functions as an
important element of and perhaps even a necessary predicate to the
industry's swift cycle of innovation. In so doing, we aim to shed light
on the creative dynamics of the apparel industry. But we also hope to
spark further exploration of a fundamental question of IP policy: to
what degree are IP rights necessary to induce innovation? Are stable
low-IP equilibria imaginable in other industries as well? Part I
describes the fashion industry and its dynamics and illustrates the
prevalence of copying in the industry. Part II advances an explanation
for the piracy paradox that rests on two features: induced obsolescence
and anchoring. Both phenomena reflect the status-conferring power of
fashion, and both suggest that copying, rather than impeding innovation
and investment, promotes them. Part II also considers, and rejects,
alternative explanations of the endurance of the low-IP status quo. Part
III considers extensions of our arguments to other fields. By examining
copyright's negative space - those creative endeavors that copyright
does not address - we argue can we can better understand the
relationship between copyright and innovation.


full text at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=878401
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