The Need for Weak IP Protection in the U.S. Fashion Industry

Despite the fact the enforcement of intellectual property rights in the United States fashion design industry, relative to other innovative sectors such as computing, music, television and film, may seem non-existent, fashion accounts for $200 billion in sales annually in the U.S.  Two prominent legal scholars, Kal Raustiala and Christopher Springman, have written a series of articles that explore why the fashion industry remains creative and profitable in the face of extensive copying.  In response to yesterday’s post by Ms. Amanda Branch, and due to the fact that many scholarly investigations of intellectual property protections in the fashion industry have generally proposed increasing regulations without considering why the industry remains innovative, this post highlights three arguments put forth by Raustiala and Springman against increased IP protection in the fashion industry.

First, Raustiala and Springman argue that copying helps to spread fashions into the mainstream, causing designs to lose their appeal – a phenomenon the pair calls “induced obsolescence.”  Their reasoning is based on the notion that fashion is a status-conferring good.  Specifically, they argue that “in affluent societies, apparel purchases are motivated to a large degree by status seeking ….  As an attractive design begins to spread, its positional, or status-conferring value grows as fashion-forward consumers consume it.  But as the design diffuses beyond the fashionable to the ordinary consumer, its positional value declines, and fashion-conscious early adopters are primed for the next new thing.”  In short, copying turns a particular design into a trend, which peaks and then declines in popularity, increasing demand for new designs.

Second, Raustiala and Springman argue that copying aids in anchoring trends.  Since consumers seek to follow trends, copying aids in communicating new trends to consumers and allows consumers to follow them.  This notion is based on the consumption cycle.  In the words of the authors: “[f]or a new trend to drive consumption, the industry must somehow communicate to us what the new thing is (or what the set of new things are).  It does that by turning out a large number of copies and derivative reworkings of a limited number of designs each season.  In other words, the industry ‘anchors’ its seasonal output to a discrete set of designs – trends – that characterize what is, at least for the moment, in fashion ….  In turn, trends send signals that reduce the information costs that all of us face in getting dressed ….”  Thus, copying enables trends to be set by communicating them to consumers.

Third, the authors argue that the current push by US Congress for increased protections in the industry is imprudent and could lead to unintended results.  Their argument is based on the simple fact that the fashion industry has thrived for over two centuries without stringent intellectual property protection.  This notion is empirically supported by the behaviour of the fashion industry after the fall of the Fashion Originator’s Guild of America (“Guild”).  The Guild, an organization created in 1933 by the U.S. fashion industry, tried to prevent the copying of designs by providing a registration scheme for manufacturers.  The authors point out that “since the toppling of the Guild [in 1941], the fashion industry has grown despite … its low-IP regime.  Indeed, there is no compelling evidence that copying … has produced systematic harm for the industry.”

It seems likely that the fashion industry can survive without increased copy protections.  However, Raustiala and Springman’s articles do not directly address the arguments put forth in Ms. Branch’s post.  Discussions for reform in copyright protection by the U.S. Congress should consider the arguments raised by Raustiala and Springman, as well as those highlighted by Ms. Branch, and should not lose sight of one of the underlying goals of copy protection – the promotion of innovation.