Should fashion designs be eligible for copyrights? When I listen to people talk about this issue, many of the same interesting arguments come up. These people know about designer knockoffs and feel that something is not quite fair about them. Yet they also view copyists as moving innovation along in the fashion world. Copying releases new fashions from the small circles of their origins to the wider marketplace; it translates designs from abstract experimentation on the catwalk to concrete wearability on the sidewalk. Copying thus plays a vital market role in fashion. And so, in my admittedly small and biased sample, a typical conversation about fashion copyright invariably trends toward a reluctant opposition.

The issue arises because after a century of relegating fashion designs to the wilderness of intellectual property law, Washington seems poised to begin domesticating the fashion industry. With Sen. Chuck Schumer (D-N.Y.) as lead sponsor, the Innovative Design Protection and Piracy Prevention Act (S.3278) was introduced last August. Design protection bills have been introduced routinely since the 1970s. Yet only in recent years has the cause gained significant legislative momentum. Since 2005 about a dozen precursors to the current bill have been introduced in the House and Senate. A slate of hearings has harvested the views of academics, designers, and celebrity witnesses. The current bill—pruned by numerous drafts and political-legal deals, plus a detailed review by the U.S. Copyright Office—was a honed legislative compromise designed to win majorities in both chambers in a postelection congressional logrolling frenzy.

If enacted the bill would amend the Copyright Act to provide three years of protection to fashion designs that meet defined standards of originality and novelty. As defined in the bill, a fashion design is the “appearance as a whole of an article of apparel including its ornamentation.” An infringement of a protected design occurs if a copy is found to be “substantially identical in overall appearance” to the protected design, so long as it can be “reasonably inferred [that the copyist] saw or otherwise had knowledge of the protected design.” The bill includes a system of penalties and various provisions to limit collateral consequences like excessive litigation as well as unfair burdens on emerging designers and home sewers. Once the law was in place, fashion would join computer software, vessel hulls, and architectural designs as recent exceptions to the “useful article” rule written into the Copyright Act.

The U.S. apparel industry has essentially always operated in a “low intellectual property equilibrium” (as law professors Kal Raustiala and Chris Sprigman have aptly surmised in their influential study of fashion copyright). Trademark protects certain features in fashion design like brand names, logos, and unique attributes that consumers use to identify designs with a particular brand. The stitched polo player on Ralph Lauren’s shirts is protected, but the overall design of the shirt is not. The plaid pattern made famous in the linings of Burberry’s top coats is protected; the silhouettes of their topcoats are not. As for patents, the process is too slow and its standards of novelty too strict for fashion.

Copyright law has traditionally not protected fashion because a garment is considered a “useful article” that combines a utilitarian purpose (covering the body) with the designer’s creative expression. Still, certain articles like a sculpted brooch or an artistic belt buckle are protected if they are considered works of art that are separable, at least conceptually, from the clothing article itself. And while a two-dimensional sketch is generally protected, the physical rendition of the design as an article of clothing is not. “[A] man’s property is limited by the chattels of his invention,” wrote Judge Learned Hand in an important 1929 case involving dress designs, Cheney Bros. v. Doris Silk. “Others,” he concluded, “may imitate these at their pleasure.”

The case before Judge Hand bore remarkable similarity to the fashion-copying issue before us today. The complainant was a company, Cheney Bros., Inc., whose business model employed constant experiments with dozens of dress patterns simultaneously to discover the designs that would become market trends. Meanwhile the respondent, a company named Doris Silk, would copy the successful dress patterns once they were identified by Cheney’s experiments and then proceed to undercut its prices. Even though Judge Hand’s opinion is full of sympathy with Cheney and he had some degree of impatience with the design copyist, he ultimately could find no refuge for design originators in the law. “To exclude others from the enjoyment of a chattel is one thing; to prevent any imitation of it, to set up a monopoly in the plan of its structure, gives the author a power which the Constitution allows only Congress to create.”

Having been spurned by the courts, fashion designers did not initially go to Congress for protection. Instead, the industry organized more effectively and took matters into its own hands. The Fashion Originators Guild of America, a cartel among design originators, lasted from 1932 to 1941. Guild members agreed to boycott retailers who dealt with known copyists. The Guild employed clandestine shoppers trained to spot fakes and a tribunal to determine whether designs were copies. Guild members were fined for conducting business with known copyists. While reportedly successful at achieving its ends, the Guild was dismantled in 1941 by the U.S. Supreme Court, which ruled the boycott in violation of the Sherman Antitrust Act. Since then the fashion world has enjoyed almost no intellectual property protection.

Meanwhile, as one would expect, copying of fashion designs has been rampant and grows faster and more efficient with digital communication and production technologies. Some design copying occurs bilaterally between individual designers. For instance, in 2009 Diane von Furstenberg inadvertently copied protected elements of a men’s jacket designed by two Canadian designers (the dispute was later settled out of court). More commonly, large-scale manufacturers copy the designs of small-scale and artisanal designers, then bring mass quantities of the modified design to market at lower prices. During fashion week or the Oscars, for example, copyists hurriedly beam runway photos to factories around the globe, which translate the images into wearable copies and begin manufacturing tout de suite. Copyists can place finished garments on store racks in a few weeks.

It is this latter, large-scale form of copying that most disturbs design originators. “When things get copied, it’s like somebody coming into my head and robbing, stealing,” said designer Maria Cornejo during New York fashion week last September. This reflects the attitude more broadly of the industry’s upper crust of designers, which sometimes vilifies copyists in support of the pending legislation. In 1996 Narciso Rodriguez designed a wedding gown for his friend Carolyn Bessette for her marriage to John F. Kennedy, Jr. The gown was instantly copied and marketed around the world before Rodriguez could commercialize his own design. Fifteen years later the cleanly elegant design is still popular among brides and easy to find online. Testifying before Congress in 2008 Rodriguez pleaded for protection. “They have stolen my DNA,” he said. “We need your help.”

As Judge Hand reminds us, copyright is essentially a form of legal monopoly. As with any restriction of competitive market forces, consumers are made to pay higher prices and enjoy less choice than without monopoly. Copyright also restricts the public domain, diminishing the rate of downstream innovation. So the downside to copyright is higher access costs for two groups.

On the other hand, copyright is intended to encourage creative works since the designers know that their monopoly position will let them capture most of the economic value of their innovation.

In short, copyright is a social tradeoff: Some access is sacrificed for more innovation. This is a deeply ingrained concept in American society, as Article I Section 8 of the U.S. Constitution empowers Congress “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Empirically speaking, the tradeoff bears no relevance to the fashion industry. Rather, fashion is well known as a highly competitive and highly innovative market. Design innovation in fashion is vibrant even though design originators enjoy no copyright and copying is widespread. Each fashion cycle unveils a remarkably creative array of novel designs. Entry by new designers is robust, and bold newcomers often move to the cutting edges of innovation. According to the evidence, the creative forces of design originators respond to something deeper than intellectual property protection, perhaps artistic imperative or the quest for fame. As for revenues, design originators have developed indirect mechanisms to lend their reputational capital to perfumes, cosmetics, and accessories, whose high markups afford handsome licensing fees.

To be accurate, the supporters of the legislation do not seek to promote innovation but to achieve what they regard as fairness. Kaomi Goetz, the executive director of the Council of Fashion Designers of America, summed it up: “Designers invest a lot of time, a lot of resources, a lot of energy into creating their collections. It can take them nine months and billions of dollars. So when they present those collections and somebody can just steal them right off the runway, within seconds, and profit from their work, their energy, their intellectual property—it’s not fair.”

Nonetheless, this competitive and innovative outcome is puzzling because the lack of copyright does not appear to have been significantly costly to the industry. On the contrary, copying helps the fashion industry broaden the scope of its innovations and achieve greater relevance to consumers and society.

As we scratch the surface of the fashion industry and begin to analyze it more closely, we can see why fashion inverts the expected economics of intellectual property. As consumers of fashion (that is, all of us) we show enormous variety in the way each of us views it. We all place different combinations of value on novelty, exclusivity, style, variety, conformity, comfort, and of course money. Some of us are fashion-conscious. Others have mastered that traveling professor look. Probably most of us take fashion more seriously than we would admit. And we all seem to have strong feelings about how much time and money ought to be spent shopping.

Copyists enable the industry to meet the range of consumer preferences by segmenting the market into as many different consumer types as possible. By segmenting choices into different styles and price ranges, copyists let consumers easily identify with fashion, become comfortable with a look, experiment and cross over between segments, or pick and choose from multiple segments at once. Go ahead and splurge on the suit, but bargain hunt for the shirt and tie. Segmenting also lets people with low incomes afford to participate in fashion and have access to tasteful, fashionable looks even on a modest budget. Walmart in fact sells its own apparel lines and began showing at New York’s Fashion Week in 2005. Fast fashion has dramatically expanded the options available to low-income households.

From Catwalk to Sidewalk

At the high end of design the fashion show lets design originators pursue their innovations. Since originators do not need to uphold wearability or marketability as priorities, they have freedom to experiment with materials, silhouettes, color patterns, hem lines, and so forth. This often results in designs that have high degrees of abstraction. This abstraction in turn gives wide berth to originators in exploring and communicating their ideas—their ideological statements on the current state of fashion, its relation to the world, and the designer’s normative claims on how he or she wishes to change the world. Most people don’t take fashion that seriously (myself not included), and many find it difficult to relate to what comes down the catwalk during fashion week.

To go from abstract ideas on the catwalk to fashionable clothing on the sidewalk, however, requires an imitative-adaptive process. As with all fields of creative expression, ideas at a high level of abstraction are initially appreciated by niches of elite expertise and taste. Ordinary consumers may not understand everything on the runway but experts can, and these small circles of virtuosity are the only audience that matters when design originators aim to innovate. To then translate the abstract into the economic trend, downstream innovators analyze, imitate, and reformulate the originals, editing the complexity while retaining the aesthetic. This process of adaptation and imitation transports abstract ideas from elite niches to broad appeal, creating clothes that people can relate to and want to wear.

When design copyists compete to imitate and adapt design originators, they also discover manufacturing and distribution shortcuts that help reduce unit costs. By removing a seam here or there, using less costly fabric, inventing an electronic inventory system, and so forth, fashion copyists reduce their own costs and can offer designs to consumers in even lower-priced market segments. It is only in recent decades that people of even modest purchasing power began to have access to fashionable, tasteful looks. “Queen Elizabeth owned silk stockings,” Joseph Schumpeter famously observed. “The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.” Similarly, Frédéric Bastiat expressed wonder at the market’s ability to feed Paris without a central plan. The same holds for the spontaneous order of the fashion world. Paris gets clothed as well, good sir.

The public discussion over fashion copyright is well underway. Design originators have a normative head start in that discussion, just as the complaint by Cheney Bros. drew the sympathies of Judge Hand. It is unfortunate that the public discussion treats design copyists as pirates and parasites. We might instead view them as adaptive-imitative entrepreneurs whose innovations serve beneficial economic functions. Copying in fashion is not a mere exercise in copying apparel designs. Copyists translate the abstract into the real, thus moving innovation along in the industry, reducing costs of production, and making fashion relevant to all segments of consumers and society.

As its proponents will tell you, the proposed legislation is not about spurring innovation. Rather, it is about design originators keeping a bigger share of the economic pie that they help create. In our democratic society, the industry can lawfully attempt to steer the machinery of government in directions that enrich itself. It is up to the rest of us to discuss whether easing the competitive market burdens on design originators is worth the costs to downstream innovators and their consumers.

Reprinted with permission of the publisher. © Copyright 2010, Foundation for Economic Education.