Fashion's Piracy Paradox
Hello, readers of the Chicago Faculty Blog. It's a great honor to have our paper, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, which will appear in the December Virginia Law Review, serve as the topic of discussion on the mobblog and we thank Randy Picker for suggesting the idea. We also want to thank the commentators he has rounded up; it’s always great to get feedback from colleagues whose work we admire.
The Piracy Paradox is about the challenge that the fashion industry presents to the orthodox theories of IP. Advocates for strong IP rights argue that absent such rights copyists will free-ride on the efforts of creators and stifle innovation. Yet fashion presents a significant empirical anomaly: the industry produces a huge variety of creative goods without strong IP protection in one of its biggest markets (the United States), and without apparent utilization of nominally strong IP rights in another large market (the countries of the European Union). Copying and derivative re-working are rampant in both the U.S. and E.U., as the orthodox account would predict. Yet innovation and investment remain vibrant.
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 orthodox IP theory.
Our paper explores this puzzle.
We argue that within the fashion industry copying does not deter innovation--and it may actually promote it. This makes the existing low-IP regime stable, even though in nearly every other major creative industry IP rights are strong and (often) expanding. In explaining the piracy paradox, we aim to shed light on the creative dynamics of the relatively-unexplored apparel industry. But we also hope to spark further exploration of a fundamental question of IP policy: to what degree are IP rights necessary *in particular industries* to induce innovation? Is the kind of stable low-IP equilibrium we see in the fashion industry imaginable in other industries as well?
(A brief doctrinal note: Why is fashion design mostly unprotected by IP law in the
Many of the details of our paper will emerge in the commentary to follow, but we’ll provide a quick summary here. We advance an explanation for the piracy paradox that relies on two interrelated elements: induced obsolescence and anchoring. Both phenomena reflect the status-conferring power of fashion, and both suggest that copying, rather than impeding innovation and investment, actually promotes them.
First, what do we mean by induced obsolescence? Fashion is a status-conferring, or “positional”, good. As an attractive design begins to spread, its status-conferring value grows as fashion-forward consumers consume it. But as the design diffuses to the general public, its positional value declines, and fashion-conscious early adopters begin to seek the next new thing. Obligingly, the fashion industry has a new round of design innovations ready for them to consume. The cycle of innovation and diffusion starts again.
This is the fashion cycle, and it’s familiar to anyone who’s thought about the industry or even paged through an issue of Vogue. Less well-appreciated is the connection to the otherwise-puzzling low-IP regime. The industry’s practice of copying and re-working attractive new designs very quickly is made possible by the current legal regime. The legal regime speeds up the fashion cycle by diffusing designs more rapidly, which then drives them toward exhaustion.
We also describe a second dynamic, anchoring, that works along with induced obsolescence in stabilizing fashion’s low-IP equilibrium. The basic thrust is simple and reflects another well-known attribute of fashion: trends. By turning out a large number of copies and derivations each season, the industry “anchors” its seasonal output to a discrete set of designs that characterize what is, at least for the moment, in fashion. The low-IP regime in fashion permits trends to occur, and trends in turn drive the fashion cycle. We discuss some of these trends in the paper and provide pictures to illustrate. The process of trend-making is so familiar that it’s almost invisible. But it’s a vital element of the industry’s innovation process, and it is able to happen in part because IP doesn’t stand in the way.
There is much more to say. But we hope that the discussion over the next few days will touch on a subject we begin to explore in The Piracy Paradox; namely, whether the story of the fashion industry extends to other creative fields. We are particularly interested in exploring what we term the “negative space” of IP law. By that we mean creative activities to which IP rules could apply, but do not. We offer a clutch of examples: food; football plays; perfume scents; haircuts; and many more. Why do these plainly creative endeavors fall in the negative, rather than the positive, space of copyright? This question goes well beyond our forthcoming article, but we think it is fascinating and surprisingly unstudied.