Finally, I get to combine two of my main interests: economics and fashion. :) I've wondered for a while now why clothing designs (and handbag designs and so on as well) don't enjoy intellectual property protection. Actually, I just figured that most intellectual property protection was a bit irrelevant for the fashion industry, since by the time a designer gets a patent or copyright on the books, she will have already moved on to the next (hopefully) hot design. If people have a short attention span for designer fashion items, then those that buy the real items right away and those that buy the knockoffs later (or at all, out of principle) would likely not be the same people. If this is true, then the knockoffs are not taking significant sales away from the original items, and may even be bringing positive attention to the designers.
I will acknowledge that the key to the above argument is the time lag between the introduction of the original designer items and the appearance of the knockoffs. As this time lag gets shorter, more substitution may occur. According to the Washington Post, legislators recognize this and are giving some attention to the issue. Bills have been introduced in the House and Senate that would give 3 years of copyright protection to clothing designs. (Why not patent protection, I wonder?) I am pleased to see this move, since I think the analogy to R&D that the article alludes to is a valid one. We understand this concept in the context of the pharmaceutical industry, for example- without legal protection, research and development of new compounds is a public good and thus is likely to be underproduced in a free market. Similarly, designers have less of an incentive to "invest" in developing novel clothing designs if they know that they are just going to get copied and the profits are going to be competed away.
On a random note, I am surprised how often the aricle refers to counterfeit logo goods, since designer trademarks are already protected under intellectual property law.