We want to thank everyone for their questions — it’s great to see people responding to, critiquing and, in some cases, tweaking, the ideas we set out in The Knockoff Economy. We are fascinated by the complex relationship between copying and creativity — and we’re thankful that many of you are as well. So, to the Q&A . . .
Q. The issue that concerns my industry most is internet sales of prescription skin products such as retin-A and hydroquinone. Some might be counterfeit, but many are probably diverted products. The manufacturer sells them to a physician, the unscrupulous physician sells them on the internet at a deep discount, the patient may be hurt by expired or dangerous medications or may not use them correctly even if they are real. This hurts legitimate physicians by drawing business away from them, but also hurts a manufacturer’s reputation. (Apparently, people who have qualms about buying Viagra online don’t think twice before buying skin medications from those same sources.)
Do you plan to do any research in this area? Will you be looking at diversion in addition to counterfeits? Read More »
The Knockoff Economy: How Imitation Sparks Innovationis out! The book explores the relationship between copying and creativity. Copying has a well-known destructive side—which is why we have intellectual property rights—but it also has a much less appreciated productive side. We explain how some creative industries not only survive in the face of copying, but thrive due to copying. These industries offer an important set of lessons about intellectual property law and highlight the often complex balance between innovation and imitation. While many of the cases we explore are unusual—such as fashion and fonts—we close the book with a broader examination of the main themes and lessons and a brief look at the music business, which is perhaps the poster child for the (often exaggerated) perils of copying.
The Knockoff Economy grew out of an earlier paper of ours on innovation in the fashion industry. We realized there were many creative fields that fell outside the scope of intellectual property law in one way or another, and just as importantly, these fields turned out to be really fun to explore. Writing the book allowed us to dig into things like football and fonts, and to do so in a way that, we hope, opens up a broader debate on the law and economics of innovation. Read More »
Here is an excerpt from The Knockoff Economy: How Imitation Sparks Innovation, which has just been published by Oxford University Press. Next week, we’ll be taking questions from Freakonomics readers in a Q&A. We’ll also run a contest for the wackiest photo of a knockoff item.
THE KNOCKOFF ECONOMY
The traditional justification for trademark law, which protects brands, has little to do with innovation. Instead, trademark law’s justification is that brands help consumers identify the source of products, and thereby buy the item they want–and not an imitation. And yet brands—like Apple, or J. Crew–play an important and often unappreciated creativity-inducing role in several of the industries we explore in The Knockoff Economy.
Put in economic terms, trademarks reduce the search costs associated with consumption. If you’ve had a positive experience with basketball shoes from Adidas, then marking them with the trademark-protected three-stripes helps ensure that you can quickly find their shoes the next time you are shopping. And of course it also lets everyone else know which shoes you prefer. Read More »
Here is an excerpt from The Knockoff Economy: How Imitation Sparks Innovation, which has just been published by Oxford University Press. Over the next few weeks, we’ll be running 2 excerpts from the book here on the blog and taking questions from Freakonomics readers in a Q&A. We’ll also run a contest for the wackiest photo of a knockoff item.
In The Knockoff Economy we examine the relationship between copying and creativity. Most people who study this area look at industries such as music or publishing, where intellectual property (IP) protections are central. We do something different: we explore innovative industries—such as fashion, food, fonts, and finance–in which IP is either unavailable or not effective. In these industries copying is common, yet we find that innovation thrives. In a world in which technology is making copying ever easier, we think these industries have a lot to teach us. And one of the key lessons is that copying is not just a destructive force; it can also be productive. Harnessing the productive side of copying—the ability to refine, improve, and update existing innovations—is at the heart of this excerpt.
THE KNOCKOFF ECONOMY
Rules against copying don’t just cover outright imitation. They also address variations: works that use that some portion of another creative work but add in new stuff, and in the process transform the original work. Think of Shepard Fairey’s famous Hope poster of Barack Obama, which took an existing photograph and reworked it into an iconic image: Read More »
In states like California, where medical marijuana is a big business, dispensaries often feature dozens of kinds of marijuana. Each has it own (supposed) qualities, often reflected in the price per gram. And these names, while colorful, are pretty standardized: newspapers like the LA Weekly run pages of ads that list prices for “White Widow,” “Skywalker OG,” “Strawberry Kush,” and “Charlie Sheen”.
Can you trademark a strain of marijuana to keep a competitor from copying your “brand”? The answer is more complicated than you might think.
First, names like Strawberry Kush are not necessarily brands, but more like plant varieties, such as Meyer lemon or Alphonso mangoes. Plant varieties in general cannot be trademarked. Instead, breeders essentially get a form of plant patent. Growers and breeders can add a trademark on top of that, but the underlying plant variety name ultimately goes into the public domain for all to use. In other words, Fuji apples are a variety; Ranier Brand Fuji Apples is a trademark. A competitor can’t call their Fuji apples “Ranier”, but nothing stops a competitor from identifying their apples as Fujis. Read More »
The battle over gay rights and the Southern fast food chain Chick-fil-A has dominated the news in the last couple of weeks.
Kiss-ins, boycotts, and counterprotests have all ensued. But maybe the most clever response to the anti-gay marriage comments is the “chicken offset,” the brainchild of a lawyer, political operative, and all-around character named Ted Frank (disclosure: one of us – Sprigman – went to law school with Ted).
These build on the existing idea of “carbon offsets,” which started out as a way to bring market flexibility to CO2 emissions caps. If a polluter exceeds a cap, it can purchase an offset. The money that the polluter pays for the offsets supports projects that reduce CO2 emissions – say, the construction of a wind farm. The new, green projects “offset” the bad emissions.
Today, firms like Brighter Planet offer offsets that consumers can voluntarily purchase to balance out the carbon output of their flying, their houses, their weddings, and even their pets (did you know that the average housecat has a carbon pawprint of over 0.5 ton – mostly from production and transport of cat food?).
Ted’s stroke of inspiration was to tweak the concept of the offset and apply it to chicken sandwiches. As he explains on his new website, chickenoffsets.com, he loves Chick-fil-A sandwiches, but doesn’t want his love to come at the expense of his gay friends. And so every time you give in to that chicken sandwich jones, Ted will sell you an offset for $1. He promises that he’ll give at least 90% of that dollar to pro-gay rights groups. Which is much more than anti-gay groups are going to make on your lunch at Chick-fil-A. Read More »
This week in San Jose, a trial opened that may be the World War III of patents. Apple is suing Samsung, alleging that the Korean tech giant has knocked off many features of its iPhone and iPad. Apple wants $2.5 billion in damages – a record in a patent case — and a court order forbidding Samsung from selling some of its most popular phones and tablets in the United States. Samsung claims that Apple is the one stealing, and that some of Apple’s patents are invalid because they are so commonplace.
With respect to at least one of Apple’s patents, Samsung has a point. A patent at the heart of the dispute. Design Patent 504,889 — which lists Steve Jobs and Apple design guru Jonathan Ive, among others, as the “inventors” — is a claim for a rectangular electronic device with rounded corners. That’s right, Apple is claiming control over rectangles. The full claim is only 2 lines long, and amazingly broad – Apple is claiming all devices with the basic shape shown here. Read More »
Like a lot of products, pharmaceuticals get knocked off. And when that happens to a drug that’s protected by a patent, the next event is unsurprising: a lawsuit brought by the patent holder. But there is a very unusual twist in the pharma world. When the dust settles, quite frequently it is the major pharmaceutical firm that is paying the company that has knocked off their patented drug.
In one recent case involving Cipro, a widely-used antibiotic with annual sales exceeding $1 billion, Bayer (the patent owner) paid $400 million to a generic drug maker, Barr Laboratories, to settle their patent dispute. Why would the patent holder make such a huge payment to the knockoff artist, and not the other way around? Read More »