Copyrighting Fashion: Who Gains?

Kal Raustiala, a professor at UCLA Law School and the UCLA International Institute, and?Chris Sprigman, a professor at the University of Virginia Law School, are?experts in?counterfeiting and intellectual property. They have been?guest-blogging for us about copyright issues. Today, they write about new efforts to extend copyright law to the fashion industry.

The Private Interest in Public Laws
By Kal Raustiala and Chris Sprigman

In previous posts, we wrote about knockoffs, a widespread practice in the fashion industry. American law does not prohibit copying fashion designs. Paradoxically, the payoff from free copying has been enormous. Copying helps set trends (you can’t know it’s a trend until it’s been copied) and then helps destroy them – once a design has been widely copied, the fashion-forward hop on to the next new thing. This is the familiar fashion cycle. What’s less obvious is that the absence of copyright makes the process possible. The fashion cycle turns faster, and the industry gets richer – and creates new designs more frequently.

So why on earth would anyone want to change that?

Ask Sen. Charles Schumer (D-NY). A new bill Schumer introduced would subject fashion to copyright for the first time. The bill would protect only “unique” designs – those that are truly new and distinguishable. And only “substantially identical” copies would be illegal.

As we argued in a recent Op-ed in The New York Times, because there is almost nothing new under the sun in fashion, some designers question whether the proposed law would matter. We agree: if the legislation were strictly applied, it would matter very rarely.

But in the real world, the law will almost surely expand in a way that harms many designers and consumers. Expensive disputes will ensue over what is unique and who got there first. Lawyers (and those designers who could afford them) will be among the biggest beneficiaries. We like lawyers, but we don’t think this is good policy.

Which brings up an interesting question: why would Congress change intellectual property law in a way unlikely to help designers very much, but almost certain to hurt consumers? There are, after all, hundreds of millions of people who buy clothes, compared to a relative few who design them.

Those numbers turn out to be very significant, but in a way opposite to what you might expect. In 1965, economist Mancur Olson published a groundbreaking book – The Logic of Collective Action. Before Olson, most people assumed that in a democracy policy tended to reflect the will of the majority. But Olson showed how in many situations, small, committed minorities prevail.

Why? When a large group favors a policy change, it is expensive to organize that group to seek it. And often each member of a very large group will experience only small individual benefits from the policy – so no member has the incentive to invest in change. Apathy reigns. Conversely, a small group can usually organize cheaply. And because the group is small, each individual member is likely to realize a much larger benefit from the sought-after change. As a result, the small group is properly motivated. In short, the committed minority can often beat the disorganized majority.

That scenario explains how a lot of law is made, and intellectual property law is no exception. The problem is most acute with copyright. Producers of copyrighted works – film studios, record labels, commercial publishing companies – are few in number and stand to gain significantly from more powerful protections (and therefore have ample incentive to spend money seeking policy change). The result is that Congress hears, loudly and often, from those who favor stronger protection. Congress does not hear nearly as often from those who take the opposite view. Who is that? Well, just about every consumer who has to pay more for a book or a song because stronger property rights prevent competition from low-cost copyists that would otherwise exist. We all pay a little hidden tax every time copyright law expands.

Sen. Schumer’s new fashion bill illustrates this collective action dynamic nicely. The impetus for the bill comes almost entirely from the Council of Fashion Designers of American (CFDA). Membership in the CFDA is invitation-only, and is comprised mainly of America’s most notable designers. So the Schumer bill is the brainchild of America’s design elite. An earlier effort to pass a broader bill foundered because the larger and more proletarian American Apparel and Footwear Association refused to go along. This time, however, the two found common ground-and even issued a joint press release touting the merits of the proposed law. In a sense, all Congress is doing is anointing this marriage of convenience between two major industry groups.

Perhaps the most ironic thing about this story is that we’ve seen it all before. During the Great Depression, forces within the fashion industry tried to squelch copying. In the 1930s, that reaction took the form of an illegal private cartel. The “Fashion Originators Guild” brought together retailers and designers (much like the Schumer bill) in an effort to ensure that copies of Guild designs were not sold in Guild-affiliated stores. (Copies from Europe, though, were fair game.) The Guild accomplished this goal for several years, but in 1941 the Supreme Court declared it a restraint of trade and a violation of American antitrust law. The Guild, in short, destroyed competition–and that was illegal.

Frustrated, industry leader Maurice Rentner went to Congress, arguing that the destruction of the Guild and the resurgence of fashion copying would “write finis” to the industry, and asking for a change in the law. Congress ignored him. The result? The American fashion industry hummed along for decades, growing dramatically in size and influence. Occasional efforts to revisit this idea came and went, but none had a serious chance of passing-until now.

What the new Schumer bill does, in a basic sense, is revive the pact at the heart of the 1930s fashion cartel. While the Supreme Court had held that private actors could not squelch competition through cartels, nothing stops Congress from achieving the same end through legislation.

The only puzzle in this story is why it took so long. But as we have argued before, the answer is that copying actually does as much good as harm in the fashion industry-and maybe does more good than harm. Even the CFDA implicitly recognizes this, since the bill doesn’t try to fit fashion into the normal rules of copyright, but instead encourages trend-making and carves out a very narrow and unusual set of rules about copying. Still, some designers win and some lose from copying. Once the losers have convinced a powerful Senator, politics can trump policy-just like small groups can trump large ones.

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  1. Dennis Brennan says:

    well i got in a few sentences and then i read “you can’t know it’s a trend until it’s been copied”. what planet is that, you’re talking? the beatles were a trend. they were never copied in the sense you mean. bob dylan was a trend. also never copied. jesus was a trend. so was lao tse. never copied.
    in fact, where copying happens, the mechanism works exactly the opposite to what you say. something becomes a trend — and THEN it gets copied. and that’s WHY it gets copied — because it is a trend. give me your job. i can do it better, i would say.
    cheers,
    -dennis

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  2. Y||B says:

    you are aware, that basically the rest of the world *has* copyright protection for fashion designs?

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  3. frankenduf says:

    i found the pontification on why majority-benefit legislation is at a disadvantage amusing, but naive- the fact is that the Supreme Court has declared money to be speech, thereby protecting bribery under free speech laws- this is why public policy is in effect written by industry which has big $ as opposed to consumer groups, which have little $- that is why public policy has been hijacked in the us, not because of some fairy tale how industry lobbyists are cheaper or more selfish or more motivated than public interest group lobbyists

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  4. Diggiti says:

    This Bil is a big waste of time.

    The Fashion industry has thrived even in hard times and now that a few companies that cant keep up with the others complain, The LAWS have to be changed?

    The clothing at the award shows can only be bought by a few people. The knockoff goes to the masses. They are two totally different types of customers

    The mom looking for knockoffs in Target wont be shopping for a Donna Karan original for $10,000 .
    And the women that ONLY shop in Nordstrom/Gucci only go to Target for toilet tissue

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  5. Mike says:

    How does this mesh or conflict with the criticisms of intellectual property in a larger sense in general (lambasted as “intellectual monopoly) ?

    http://en.wikipedia.org/wiki/Intellectual_monopoly

    As some one in a creative field, this is a very important issue for me, and one that is very confusing when trying to consider the heart of what makes what I do cool and the greater good of the field I work in, and the need to pay bills and rent.

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  6. Gerry Fitzgerald says:

    What does it say about the values of our society when we afford legal protection to a cure for cancer for only 20 years, 10 of which are taking up by the registration and approval process, while even the ramblings of Ted Kaczynski are protected for his lifetime plus 70 years? What are the long term misallocations of capital, resources, and talent from the incentive to making ideas vs. making things? What part of our crisis in manufacturing does this difference in protection for different types of intellectual property account for?

    I don’t know that the answer lies in further protections of patents, but it probably speaks to shortening copyrights significantly.

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  7. Richard K says:

    Watch this video from TEDxUSC and then see if you favor Schumer’s cronyism
    http://www.ted.com/talks/lang/eng/johanna_blakley_lessons_from_fashion_s_free_culture.html

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  8. Vincent Clement says:

    @Y||B – Are any of those countries with copyright protection for fashion designs a leader in the fashion industry? Didn’t think so.

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