The Paradox of Intellectual Property

Sunday August 29 19:06

Mine, not yours, buster.

This might be an old one, but I just recently heard about it while catching up on my favorite economy and finance Podcast — the brilliantly home-spun Planet Money. In it they are talking about their project to tell the story of how a t-shirt is being making a t-shirt, from buying the bales of cotton to getting it yarned and spun and made into fabric and cut and printed and sold. You can hear all about it in this short podcast which explains how they got this idea from The Travels of a T-Shirt in the Global Economy by Pietra Rivoli.

This is an intriguing story by itself, but I was particularly impressed with the mention and short discussion of a paper called The Piracy Paradox: Innovation and Intellectual Property in Fashion Design by Kal Raustiala and Christopher Jon Sprigman. Here is the abstract of the paper:

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.

Why do I blog this? I think this gets to the substance of many issues related to intellectual property rights and the arguments on both sides. It’s also suspicious the ways that the anomolies to the “orthodox” and rather instrumental consideration of new ideas are largely ignored, according to the authors. Of course there are going to be outlier complexities to the perceived canonical position that ideas can become property that can be protected in these ways — but the fact that they are not looked at closely as revealing new approaches is very suspicious to me. I don’t believe IP is a solid, like nature — it mutates as a concept. Gobbling it all up and protecting it — or measuring people’s performance based on their ability to create and protect IP — that’s just frustrating nonsense. People often put IP on their CVs as if it were war trophies or something like this. In many ways it reveals a lack of foresight and aspiration for their ideas to say they are protected and proprietary. G’ahhh.. It drives me nuts sometimes.

Oh, on a more happy note at the end of this podcast you’ll hear that our friends at Tinker Studios in London are going to have their t-shirt idea implemented in this Planet Money t-shirt — a QR Code on the t-shirt that links to, presumably, the story about how the t-shirt was made, which is the story that Planet Money is working on.

Here’s a link to the Planet Money Podcast.

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