Sunday, August 12, 2007

It's Been a Long Time Coming...

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.


Charles said...

Copyright protection would probably be the preferred method for fashion designers given the short lifespan of designs as you noted. The patent process is notoriously slow and can only be applied once the patent is reviewed and finally approved. The copyright process is much faster in comparison and can be applied immediately. If there was something novel about the manufacture of the design or a unique accessory, then a patent might be more appropriate as it can cover the method or process as well. My guess in this scenario the designer would probably do both as patents and copyrights are not mutually exclusive.

Jodi said...

Very good point about the patents, and I didn't specifically know that copyrights can be applied immediately- an important feature, especially in this industry. It seems like the only downside of a copyright is that other designers/companies could try to argue that they thought up their designs independently and they just happen to represent the copyrighted designs.

Charles said...

You bring up a very good point in regards to competing designers arguing who created the design first. This might be an unattended outcome of the copyright protection where there is a shift in resources from R&D to the lawyers either defending or initiating copyright lawsuits. Will this open the doorway for petty copyright lawsuits in the fashion industry? I hope not as this type of activity is inefficient and counterproductive.

If this bill is passed, I wonder if it will encourage designers to consider licensing deals with the knockoff producers. I can see this being a win-win situation for both parties assuming they can come to equitable terms. Designers are compensated via royalties and knockoff producers maintain their business model. However, I am sure that the companies will try to find some way to circumvent the copyright protection and will argue it in court so all this might be wishful thinking.

Dan said...

What a terrible idea, and an even worse newspaper article. Try to answer this question: What constitutes unlawful copying of fashion? I can think of no bright line test that would make any sense, can you?

The legislation is a heavy-handed solution to a problem that has not been shown to exist. As you point out, the article goes on and on about cheap knockoffs, except that this problem is already addressed by trademark law. So basically the purpose of the law is to stop the practice of copying Oscar dresses? (Or will it even do that? Depends on the definition of unlawful copying.)

The other example in the article (YSL v Ralph Lauren) gives you a true taste of the future under this law. Big corporations suing each other. (Occasionally, fashion student will sue big corporation and lose.)

I liked Schumer's "hope" that there won't be a need for lawsuits. Has he ever met a lawyer? An aside on "petty" or "frivolous" lawsuits: It's not frivolous if it has a chance of winning. And if it has a decent chance of winning, a company may owe it to its shareholders to go for it (especially if it means possibly crippling a competitor).

I also liked the article's ipso facto statement that, "Mass marketers could still produce goods inspired by designer collections." One man's "inspired by" is another man's "stolen from."

The only worse idea would be patent protection. Put aside the fact fashion design makes no sense in the framework of patent law, and also the fact that patent law is totally screwed up and outdated (no one even disputes this). Under patent law, you can infringe another person's patent without even knowing it. Two people came up with the same shirt independently? Too bad. The second person is out of luck.
Consequently, every designer would have to conduct a prior art search before bringing a new design to market.

My final point is this: What makes fashion designers so special? Apple gets no intellectual property protection for the outward appearance of its products, despite the fact that its non-patentable design innovations must have been worth a fortune.

Btw, keep up the good blogging. Sorry I keep being so disagreeable.

Charles said...

Actually, current copyright and trademark mark law does not address the problem that designers face with knockoff designs as Jodi noted. In very simple terms a trademark can be thought of as a brand name. I'll use Tory Burch shoes as an example. The unique medallion on Tory Burch ballerina flats is a trademark. However, the flat itself cannot be a trademark or copyrighted under current law. This allows a knockoff company to make an exact copy of the flat in terms of look, shape, feel, and even quality if they wanted, but simply use a different medallion. This was an example given in one of the side windows of the article. The knockoff company is freeriding off of the designer's work. There are also other issues to consider such as brand dilution.

As for your Apple example, they do take great lengths to protect their brand and their work. The look and feel argument is a bit tricky in this case. The outward appearance does have some protection in the sense that they have pursued companies that try to make an exact copy of their work. There are also more avenues for them to differentiate their product. For example, the icons and parts of the user interface are copyrighted and other companies will not be able to copy this.

Fashion designers are special in a sense that they are afforded no protection under current copyright law due to the medium of their work. Copyright law cannot be applied to clothing as it currently stands. The "look and feel" is important factor in selling most goods. Electronic companies like Apple are afforded some protection outside of trademarks to protect their brand and their products where as fashion designers are currently not. This is what the bill is trying to address.

Here is also another issue to consider. The quality of the knockoff products has improved over the years. If quality becomes less of a concern, I am guessing that substitution effect will become even stronger.

Dan said...

Sorry. Like I said, horribly written article. The sidebar examples (which could be ??? the examples most relevant to the actual legislation) were basically ignored in the text. Was the design of the knockoff sunglasses "inspired by" or "stolen from" from the original? I don't know, but I smell litigation. I guess I could say more about why I dislike the idea, but I've already gone on too much about an issue that is really peripheral to me. (Also, I have no idea what the legislation actually says.)

Charles said...

I share your concerns about the abuse of the legal system.

However, I believe that the business rules have now changed with the very quick time-to-market and the increasing quality of the knockoffs and there needs to be some recourse for the designers to protect their work. I believe it is only fair to give them this option and hope that the abusive litigation you speak of will not occur. I hope that this legislation will spur more cooperation between designers and knockoff companies via licensing deals and render the "inspired by" or "stolen from" argument moot.

Charles said...

Here is an article published today on how quickly the "knockoff" companies can reproduce or imitate designer fashions.

Before Models Can Turn Around, Knockoffs Fly