23 posts categorized "Mobblog: The Piracy Paradox"

November 20, 2006

Closing the Mobblog on The Piracy Paradox

Thanks to Kal Raustiala and Chris Sprigman for their posts this past week on their forthcoming paper The Piracy Paradox: Innovation and Intellectual Property in Fashion Design. Thanks also to our virtual participants Shyam Balganesh, Wendy Gordon, James Grimmelmann, Amy Kapczynski, Michael Madison, Bill Patry and Tim Wu.

November 18, 2006

Bjork, the Swan, and Fashion's Low-IP Regime

A few notes responding to Randy and James:

(1) Randy, we haven't been able to find evidence of fashion industry lobbying for design protection between the fall of FOG and HR 5055.  We spoke with the head of the CFDA, which is the principal trade association for U.S. fashion designers, and he confirmed what we've seen in the public record -- i.e., that they hadn't done any substantial lobbying before.

Continue reading "Bjork, the Swan, and Fashion's Low-IP Regime" »

November 17, 2006

The Core Idea

It is true, as Randy points out in his post, that the core claims of The Piracy Paradox have not been much criticized by the mobblog. Up till now I thought that was because, well, everyone just agreed with our excellent arguments. But clearly I was being overly-optimistic.

One can certainly view induced obsolesence thru the lens of credible commitments. If the IP regime protected fashion designs, a firm could credibly commitment to limited runs at high prices. To some degree this exists in the real world. Living in Hollywood has proven useful for this project. Down the street from me is one of the world's largest high-end denim retailers, American Rag. In it are Japanese jeans that sell for well in excess of $1000. They come in wooden boxes with certificates assuring buyers that they are a limited edition. (Limited editions can be found in the sneaker world, too. Up the street from American Rag is Undefeated, a specialist in rare sneakers that is always mobbed, ironically, by young Japanese tourists). The $1300 Japanese jeans can do this because pocket stitching, the most visible part of a pair of jeans, are often trademarked, and the jeans in question have expensive appliqués of the sort that IP law does protect. In a high-IP world, firms could likewise commit to buyers that none of their clothes will be widely distributed.

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Industry Structure and Shoppingnorms

In my previous post, I suggested that Raustiala and Sprigman raise some very interestng issues about the structure of the fashion industry. Randy Picker asked similar questions about the industry's copying practices. I'd like to circle back to those questions, by way of a little speculation about copynorms.

Raustiala and Sprigman cite a very interesting paper by Fauchart and von Hippel on norms among haute cuisine French chefs. That paper observes that norms of attribution and originality among chefs sustain a level of innovation in recipes even in the absence of formal IP protections. One way of reading The Piracy Paradox is as claiming that norms also sustain an innovation-rewarding system in the fashion industry, again without reliance on formal IP protections.

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Optimal Durability and Fashion

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.

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November 16, 2006

Industries, Practices, and Boundaries

Thanks to Kal and Chris for their thoughtful responses on "negative space."  I have one follow-up comment for each, less to push on the responses themselves and more to share how their comments have pushed my own thinking: 

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Is Fashion the Future?

Another interesting question raised by Kal & Chris's paper goes something like this: Is Fashion the Future?

One thing that strikes me about the protection for fashion is that it's driven, as our authors say, by trademark and a focus on protecting and nuturing the brand.

This may be a stretch. In fact yes it is. But I wonder how similar the actual legal regime of fashion is to the de facto regime that is beginning to emerge for alot of easy-copy content, like alot of internet content, and like this blogging.

I think I am hardly the first to suggest that many content industries may be slowly migrating toward a trademark- or brand- driven industry dynamic. In other words, one where authors care less about copying itself, and more about attribution, or getting their content out there. An authorship dynamic that values exposure over control -- get famous, and then money somehow.

The question is whether Fashion is such an example -- I'm not sure. The other question is whether the future I've described actually is the future, which is a much larger question).

Negative Spaces & Meta IP

I want to first comment on the negative space discussion, which is very interesting.

The question of copyright's negatives is closely related to the question of meta-IP, which also no one understands. Why are some things protected by copyright? Others by patent? Others by nothing at all?

One theory is maybe something like a historical public choice theory. In other words, behind every grant of an IP right lies (1) a group who wants protection against misappopriation, (2) organized enough to press its claims, (3) without powerful opposition. Where that pattern has existed over time, you find a trail of intellectual property rights.

This leads to a highly path dependent, or founder's effect driven shape to the various IP domains. Copyright begins by dealing with one problem (books), makes up rules for books, and then moves on to everything that seems analogous. Patent begins with things like wrenches, makes up rules, and then goes onward from there. Under this theory there's no use looking at the nature of things, as opposed to the interest groups and litigants who were in a position to ask and get protection.

Maybe by analogy, if we were studying a tree that grows in Africa, if someone asked, why don't we find this tree in South America, the answer is that the organism didn't quite get there, and instead another tree is growing where it might have.

That explanation may be one of the more accurate, but perhaps less fun. I think there's alot to think about in Clarisa Long and Henry Smith's approach to these problems, which is to look at the information costs created by the items in question and the IP regimes in question. So, for example, (as Mike pointed out), copyright has a tendency to cling to physical things that, well, can be easily copied. Patent, at least traditionally, was stuck to the physical ebodiment of an invention. So some of the negative and positive spaces in IP might be helpfully understood this way.

Copyright's Domain

Michael is absolutely right that we do not offer an encompassing theory of copyright's domain in The Piracy Paradox. In part we felt we had taken on enough by tackling the links between fashion and IP. But at the same time we wanted to highlight what we saw as a deeper question at the core of IP theory generally. With limited space (and intellect), we merely laid out the question and offered some food for thought.

It is nonetheless striking to me that the project of delimiting what is in--and what is out--of copyright has received so little attention. Certainly others we cite in the paper, such as Jessica Litman, have pointed to some anomalous areas such as cuisine. But positive theories of copyright's domain are scarce. In part I see this as a species of a broader genus. Legal scholarship is often consumed, perhaps understandably, with what the law is. Fixing broken doctrines and explaining how they fit together are common projects in the legal academy. But less common is the project of delimiting when law is used or applied and when it is not. (In the other field I write in, international law, scholars have written reams of articles on treaties, but very little on informal, tacit, or non-binding agreements.)

Certainly work of this sort exists; Lisa Bernstein's fascinating paper on the diamond industry comes to mind, as does the story of Shasta Country ranchers told by Robert Ellickson. More is needed. Chris argued that we need to do this inductively and have a granular understanding of different industries before we go forward. I think a deductive approach is also possible. Either way, I'd certainly like to offer more thoughts on this in the years to come, and I hope others do as well.

Some negativity about a positive theory of IP's negative space

Thanks to Mike Madison for his comments, which quite properly note (and lament) my reluctance (and Kal's) to supply a overarching theory of copyright's (and IP's) negative space. 

I feel Mike's pain, but at the moment I can't offer much relief.  I just don't feel that we know enough to have a general theory, or really that we need one yet.  Most importantly, I don't want to replicate what I think is the major problem with copyright law generally, which is over-reliance on a general theory of innovation without more than a passing acquaintance with the facts of any particular industry's innovation culture.  I'm less interested, at this point, in theories of copyright than I am in practices of innovation.  And before I arrive at a theory that crosses industries, I think we need to build up a set of observations about each industry in the negative space.

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November 15, 2006

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:

Continue reading "The Negative Space of Copyright" »

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.

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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.

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November 14, 2006

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.”

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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: 

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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.

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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).

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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.)

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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.

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Is Fashion a Bad?

I'll start by making a partly-facetious, partly-serious point about this very interesting paper. The authors pitch it primarily as an analysis of why fashion has a low-IP regime, rather than whether that regime is optimal. Many of their arguments do in fact amount to a claim that many players in the industry (if not necessarily the industry as a whole) benefits from a regime in which imitation is largely unconstrained by IP law. But they avoid--almost deliberately, it seems--any discussion of whether society in general is better or worse off because copyright doesn't seriously protect fashion designs.

That strikes me as a bit of a shame, because their analysis of induced obsolecense seems to fit nicely into another classic theme in political economy: how an industry can sometimes arrange its market to its own benefit but to the detriment of society. The fashion cycle is perhaps the classic example of wasteful social behavior. We spend enormous amounts of money, time, and grief on things we'll throw away the instant they start to go out of fashion a few months (or even days) from now. Raustiala and Sprigman are hip to this set of arguments; they have the cites to Thorstein Veblen and his "norm of conspicuous waste" to prove it.

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Barriers to Entry and Status Marks

"The Piracy Paradox" disclaims any attempt to be normative. But of course it's the normative implications that are most intriguing. Let me apply the paper's insights to an issue I've been contemplating, namely, status trademarks.

I'm referring to the marks themselves, not to design elements in a blouse or coat that may achieve distinctiveness as trade dress. As the authors note, rapid turnover in fashion design is probably good for the fashion industry, and like the authors I'm agnostic about whether rapid turnover in fashion design is bad for the populace. (See note 89 of "The Piracy Paradox.") Fashion has an aesthetic element that makes investment in its renewal potentially valuable for society as a whole. What I'm less agnostic about is the lack of societal value in status marks themselves.

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November 13, 2006

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.

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November 10, 2006

Mobblog on The Piracy Paradox

This upcoming Tuesday—November 14—we are going to try a new format on the blog: an online workshop, or, as I have called it before, a mobblog. The idea is to pick a topic and have a group descend on the blog to discuss it for a few days. We will be discussing The Piracy Paradox: Innovation and Intellectual Property in Fashion Design by Kal Raustiala of UCLA Law School and Chris Sprigman of the University of Virginia School of Law. Chris is a former Chicago Law student, so we are particularly eager to have him back to spend time in our virtual halls.

Kal and Chris will start the discussion on Tuesday with a post that will summarize their paper (though, like any other workshop, there is no substitute for reading the paper itself). In addition to our usual Chicago bloggers, we have lined up a group of virtual participants, including Shyam Balganesh, Wendy Gordon, Amy Kapczynski, Michael Madison, Bill Patry and Tim Wu.