Why Knockoffs Can Help Build a Strong Brand

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
CONCLUSION

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. 

Who Owns Red? Maker's Mark and Jose Cuervo Fight It Out

A few months ago we wrote about whether shoemaker-to-the-stars Christian Louboutin ought to have a monopoly over red shoe soles. Last week, in Kentucky, a similar issue arose concerning red wax. The red in question was on the neck of bottles of booze—specifically, Maker’s Mark bourbon and Jose Cuervo’s Riserva de la Familia tequila, which both feature a bottle cap seal made of red, dripping wax (Cuervo has since shifted to a straight-edged red wax seal).  Maker’s, which used the dripping wax seal first, sued Cuervo, claiming trademark infringement.

Sexual Fidelity = Brand Loyalty?

Here's an interesting piece from Yale Fox over at Darwinversusthemachine.com on how the fidelity we demonstrate in sexual relationships mimics the loyalty we have to brands.

Much research shows that if there are no consequences to cheating, or if we can get away with it, we are very likely to do so. However, brand conversion is more than having the user cheat on their product once. We want them to understand that they are trading up to the new brand. It’s always possible to convert someone to your brand permanently. This can be achieved if the right environmental pressures are in place to do so.