Fashion and the piracy paradox

James Surowiecki has been applying his wisdom of crowds mind to intellectual property in the fashion industry.

"In 1932, a group of American fashion manufacturers found themselves beset by a proliferation of cheap knockoffs. Designs, then as now, were not protected by patents or copyrights, so the manufacturers decided to take direct action to stop the copying. They set up the Fashion Originators Guild of America to monitor retailers and keep track of original designs; if you look at vintage dresses from the thirties, you can find labels reading “A registered original design with Fashion Originators Guild.” Retailers selling knockoffs were “red-carded,” and guild members wouldn’t sell their merchandise to red-carded stores. This was unpopular with the retailers, but it seems to have put a damper on the copying. The only hitch in the plan was that it was illegal: in 1941, the Supreme Court ruled that the manufacturers’ arrangement violated antitrust law, and the knockoff artists stayed in business."

He (or at least two law professor's whose paper he's been reading) reckons that obsolescence in the industry only comes about through widespread copying which then provides an incentive for designers to produce the next big thing.

"More striking, a recent paper by the law professors Kal Raustiala and Christopher Sprigman suggests that weak intellectual-property rules, far from hurting the fashion industry, have instead been integral to its success. The professors call this effect “the piracy paradox.”

The paradox stems from the basic dilemma that underpins the economics of fashion: for the industry to keep growing, customers must like this year’s designs, but they must also become dissatisfied with them, so that they’ll buy next year’s."