The University of Chicago Law School Faculty Blog

The Negative Space of Copyright

First, many thanks to Kal and Chris for offering their paper for the mobblog, and thanks to Randy for inviting me to join.

Second, in this post I'd like to focus on Part III of the paper, which, as Kal and Chris write, asks "whether the fashion industry has anything to say about the orthodox justification for more IP rights more generally."  While I like the question, I'm a little bit disappointed by their answer, which seems to be:  maybe.  Part III compiles an intriguing and seemingly idiosyncratic compilation of other fields that, with fashion, occupy what Kal and Chris call copyright's "negative space":  recipes, furniture design, tattoos, computer databases, open source software, microprocessor designs, hairstyles, perfume, magic tricks, and fireworks displays.  Is there a thread that links these (and other) fields in an integrated theory of innovation law?  Or is each field subject to the kind of socio-economic investigation that The Piracy Paradox initiates?  The paper equivocates. 

The equivocation may be understandable in this paper, even if I'd welcome a hypothesis or two. Perhaps a followup project will attempt an answer.  I'll offer a preliminary answer of my own:

More on Arrow & Demsetz

I concur with Chris on Amy's interesting questions. Let me add that the first mover advantage is something that probably operated more meaningfully in the early part of the 20th century, and indeed if you read the history of the industry you see practices that in essence were aimed at extending or securing that first mover advantage. But over time technology eroded that advantage, and by the time fax machines came into existence it was more or less over. Recent years have brought forth faster shipping and more nimble global supply chains, further shrinking the time gap between original and copy. So we don't see much leverage from this idea, though in the end it is an empirical question that we don't really test. Certainly future research ought to be done.

Arrow, Demsetz, Kal and me

I'm preparing for a lunch meeting where my Virginia faculty colleagues are helping me to "incubate" a new paper idea, so at this point I can respond only briefly to Amy's very insightful post.  A couple of points:

(1) Amy suggests that if R&D in the fashion industry is cheap, and copying relatively expensive, then perhaps non-IP factors such as first-mover advantage, or perhaps the status value of trademarks, explain why we have innovation in the fashion industry without copyright on designs.  We've thought about both these possibilities, and we think they play a role, but they don't tell nearly the entire story. 

First-mover advantage.  Innovation in the fashion industry is relatively cheap, in that it requires less investment than innovation in, say, pharmaceuticals.  Copying is, however, also very cheap.  And, perhaps most importantly, the effect of first-mover advantage is limited, in our view, by the fact that copying occurs very rapidly.  So any period of de facto exclusivity is likely to be very short.

Arrow and Demsetz

This paper is full of interesting insights and ideas, and offers a wonderfully rich set of issues for discussion. Here are two questions that occurred to me.

First: The paper begins with the question, "Why do we have creative fashion industry, if the industry’s main creative output is not covered by an exclusive rights regime?"  But before we know that this is a puzzle, we need to know two things: (1) how much innovation (and copying) in fashion costs, and (2) whether those costs can be recovered by existing appropriations strategies, such as lead-time or status-conferring (see Wendy Gordon’s post) trademark.  Recall the classic work done by Levin and Klevorick et al. about appropriations strategies across industrial fields.  Their surveys show that pharmaceutical firms rely much more heavily on patents as an appropriation strategy than other industries surveyed.  The lesson usually drawn from this is, “That makes sense, because pharma is a field where R&D is very expensive and copying very cheap.”

Bad fashion, bad marks -- bad genes?

In The Piracy Paradox, Kal and I have been careful, as Wendy and James both note, to avoid much normative content.  We offer some models to explain why fashion has long operated, and thrived, under a low-IP rule.  But we don't say much -- indeed, we don't say anything -- about whether what's good for the fashion industry is good for society.

Let me at least tiptoe into the normative minefield, using Wendy's and James's observations as a jumping-off point.  Wendy is concerned that social welfare suffers when firms spend money to maintain fashion industry marks, such as Rolex or Prada, that serve mainly to confer status rather than indicate source.  I read Wendy to favor a relaxation of dilution rules as they would apply to fashion industry marks. James extends Wendy's status consumption questions to fashion in general -- if the piracy paradox does nothing but facilitate an endless status race to nowhere, what have we gained from the low-IP equilibrium?  Nothing but grief.

Alright, here are my tentative views: 

Novelty, originality, and EC design law

I wanted to respond quickly to Shyam's post on the intricacies of EC law.  The EC's "registered community design", which is the primary (EC-wide) form of regulation providing a nominal high-IP rule for fashion designs, has two eligibility criteria.  A design must be "novel", and it must have "individual character", such that an "informed user" is left with the "overall impression" that the design for which protection is sought is different from designs already offered to the public.

EC Design Protection: A Case of Sub-optimal Tailoring?

The paper spends some time arguing that the pervasive underutilization of the EC design protection regimes by the European fashion industry is evidence of the benefits associated with a low-IP environment. On the question of why the design protection mechanisms in the E.C. and the U.K. haven’t seemingly been resorted to with any great frequency, a few points might be worth considering.

The first is that, in the U.K. at least, the interplay between four regimes – (i) the Registered Designs Act, 1949 (implementing the community registered design), (ii) s. 51 of the CDPA, (iii) unregistered design protection (Part III of the CDPA) and (iv) community unregistered design protection – has resulted in a considerable amount of confusion over the contours of each regime and the extent to which they remain complementary/overlapping/exclusive. It is then plausible to argue that the over-saturation of rights in this area coupled with the complexity involved in working them is to a large extent responsible for their under-utilization (a quasi anticommons situation – where the under-utilization isn’t of the resource, but of the rights).

The Texture of Copying

Randy asks us to elaborate on the empirical side of copying in the apparel industry, and rightly focuses on how symmetric, or asymmetric, copying is. As we describe in the paper, the fashion industry has many layers and roughly exhibits a pyramid shape. As one moves up the pyramid, prices and, broadly, design content go up. At the very top are the exquisitely-expensive custom clothes known as haute couture; at the bottom the mass market clothes one finds in Wal-Mart, Old Navy, and so forth. Writers on fashion have claimed that while this pyramid exists, fashion today (meaning in the last decade or two) has become far more "democratized," by which they mean that styles not only trickle down from the likes of Chanel and Prada but also bubble up from the streets and from cheaper labels. I tend to think this true.

That said, it remains the case that certain designers and labels are copied a lot. Some are simply more influential than others. So Randy is right to question whether there is symmetry in copying. But I think his analogy to pharma, while creative, doesnt hold up, in part because the claim we make, that "one is more likely, over time, to be a copyist than to be copied," is somewhat endogenous to the legal regime. In other words, since the legal regime is one of free appropriation, copying is easy, and firms copy those designs that seem to grab the marketplace. (Why one design gets hot and another doesnt remains a mystery for all concerned.)

Marriage: Scripture vs. Morality

Last Friday, my younger daughter got engaged.  She surprised her partner with a proposal, a ring, and a string quartet playing “their” song. As my wife noted, with two daughters we never thought we’d have a daughter-in-law.

Understanding the Texture of Fashion Copying

The paper is a fun read—even for those of us who think of ourselves as fashion challenged—and I have a number of questions about it. I will focus on just one for this post and will come back to others across the course of the discussion.

 

Kal and Chris: could you tell us more about exactly how the copying works within the industry? At pages 5-8 of the paper, you lay out some of the key institutional features of the industry. Those include the Fall and Spring runway shows in New York, London, Milan and Paris and also the fashion pyramid, with high-fashion at the top; bridge lines beneath that; followed by better fashion and then mass-market fashion.