Notwithstanding a very lively discussion over the last four days, we have spent almost no time on the core claim of the paper, namely, that a “piracy paradox exists,” that is, “counter-intuitively, copying is not very harmful to originators” and that “copying may actually promote innovation and benefit originators” (p.5). I confess to skepticism about that claim. Let me lay out the idea as I understand it and then explain my doubts.
The core idea is induced obsolescence. Desirable fashions get copied by lower-end producers and that extends those fashions to the masses (people like me). Those seeking high-status through fashion don’t want to be confused with me, so they need something to move on to and the higher-end producers make changes—innovate seems like too strong a word (whatever else you want to say about Mao I think that he was on to something when it came to clothing)—to provide new products to the status conscious so that they can again separate themselves from me. The game theorist in me wants to say this is an ongoing exercise in separating and pooling equilibria. This ongoing cycle of change and copying creates constant churn—again I resist innovation—in the fashion market.
What to make of this? The analytics on this are far from obvious. This is really a question of optimal durability: how long should something be built to last? In a world without fashion copyright, high-end designers lack the means to commit to their customers that the masses won’t catch up with them. If the frock in question is all about separation, the value of the good is completely dependent on the technology of copying. With instantaneous copying—something like the Copybot currently upending Second Life—the high-end designers couldn’t sell anything to their customers. The more that that they can promise to their customers, the higher the price that they should be able to charge for that promise. Fashion copyright would give high-end designers the means to make credible commitments about separation.
That takes me next to looking at the behavior of the industry in seeking IP rights. The part I know best, discussed in the paper, is the 1940s Fashion Originator’s Guild and then the current efforts at new fashion IP legislation. You discuss FOGA at pages 11-12 (circa fn 20) and I would love to know more about it. I teach the Supreme Court opinion in my antitrust class but have never dug in deep behind that. The Court’s description makes the Guild sound like a remarkably extensive effort at private property rights creation (a registration system, information distribution, private tribunals for adjudications). The Guild clearly stepped beyond that to more obviously anti-competitive steps (e.g., restrictions on advertising), but the Guild itself suggests that a higher-IP regime was desired. That of course wouldn’t tell us that moving to that regime would have been good for all of us—social optimality—but that point seems like a counter-example to your claim that copying doesn’t hurt originators. Their behavior suggests that they thought that it did (whether it actually did of course is a different matter, but I don’t understand your discussion of FOGA to take on that question).
That takes us finally then to the industry’s effort to get new legislation, H.R. 5055. As I note above, the faster that copying can take place, the shorter period of status that the industry can promise to its customers. My general assumption is that it has gotten easier to copy over time. So if the industry wanted protection in the 1940s it should have wanted it even more at each point after that. I guess that I want to ask about the “negative space” of pursing fashion IP legislation. Did the industry actually not pursue legislation between FOGA and H.R. 5055? You probably lay this out in the paper, but I can’t seem to lay my hands on it immediately.