Paradoxically, piracy sometimes spurs innovation

by kal RAUSTIALA

Artistic and literary works and scientific and technical innovations are often difficult and expensive to create. Think of the poet in pursuit of the right verse, or pizza-fueled late nights spent programming a new video game. But once the author or inventor produces the first version of a work, it is often easy and cheap for others to copy it.

The framers of the Constitution granted Congress the power to create intellectual property (IP) rights as a way to "promote the Progress of Science and the useful Arts." Advocates for strong intellectual property rights today continue to argue that unless the law equips creators with enforceable exclusive rights, copyists, having invested nothing in the work's creation, will out-compete the originator.

But is this always so? The global fashion industry produces a huge variety of creative goods without strong intellectual property protection. While trademarks for clothing brands are well-protected, fashion designs themselves are not protected in the United States. Copying is rampant — just walk into any mall and you'll see dozens of copies of the same trendy dress or shirt. But rampant copying does not deter innovation in fashion design, and it may actually promote it.

My co-researcher at the University of Virginia Law School, Associate Professor Christopher Sprigman, and I call this the "piracy paradox." The paradox rests on two features of fashion design: "induced obsolescence" and "anchoring." Both reflect the status-conferring power of fashion, and both help explain why copying, rather than impeding innovation and investment, promotes them.

Here's how: An attractive design's status-conferring value grows as fashion-forward consumers consume it. But as the design diffuses beyond the fashionable to the lumpen, its status value declines, and fashion-conscious early adopters are primed for the next new thing. Obligingly, the fashion industry produces a new round of design innovations, and the cycle of innovation and diffusion starts again.

Anchoring works hand in hand with induced obsolescence. For induced obsolescence to work, the industry must somehow communicate to us what the latest trends are. It does that by turning out a large number of copies and derivative re-workings of a limited number of designs each season. In other words, the industry "anchors" its seasonal output to a discrete set of designs that characterize what, at least for the moment, is in fashion. This practice of spurring consumption by trend-making is so familiar that it's almost invisible.

There are many other areas in which innovation and creativity thrive in the absence of IP protection. These include food, haircuts, sports plays and scents. We call these endeavors IP's "negative space" — creative activities and industries to which IP rules could, but generally do not, apply.

Surprisingly, what falls within and what falls without the domain of IP rules is little explored. The existing scholarly literature offers few good theories of why certain creative endeavors are granted IP rights and others aren't. In the future, we hope to study the contours of copyright's domain more closely, and we hope that other IP scholars do so as well.

Raustiala is a professor of law and director of the UCLA Burkle Center for International Relations.