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Paper Title

The Piracy Paradox and the Rule of Law -- By JayunKoo - 14 Feb 2008

This paper is based on an article called "The Piracy Paradox" by Kal Raustiala and Christopher Sprigman (2006), which Professor Heller mentioned during class in Property. It is a very interesting article, and if you want to take a break from the casebooks yet want to still feel like doing law-related reading, you can download the article here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=878401

The Piracy Paradox

In a recent paper, two law professors Kal Raustiala and Christopher Sprigman explore what they have named as “the piracy paradox,” an anomalous advantage design piracy confers to the promotion of innovation in global fashion industry. Aside from trademarks, IP law does not protect fashion design. Indeed, design pirates such as H&M and Zara freely copy the latest runway fashion and sell a large quantity of cheap copies of high-end apparel at a fraction of the price of the original creations. Contrary to the prediction of “orthodox” view of IP law, however, free appropriation of fashion design did not destroy innovation or frighten off investment. In fact, the authors argue that wide and rapid diffusion of design by copying propels the apparel industry’s cycle of innovation toward exhaustion, paradoxically promoting innovation and benefiting originators. .

The Rule of Law in Property Law

The rule of law in property seems to be determined by weighting and balancing of policies which are put forth by different schools of thought. One school of thought says achieving efficiency should be the priority, another says maximizing equity should dictate, and yet, another says protection of individual liberty should prevail. At times, different polices compete against each other, and the court is expected to weight the relevant merits and demerits and ultimately, pick a side. Over time, the court has established a rule of law which determines the winning side. The established rule of law tends to be an all-or-nothing conclusion of possession, and under some circumstances, this tendency turns out to be too inflexible and impractical. To deal with the problem, the court sometimes has to rest upon abstract terms and murky definitions, leaving us in confusion and incoherence.

An illustrative example is the law of finders. The law attempts to reward honest finders and to maximize the chance of finding the true owner at the same time. The two policies clash when the court must determine the relative right of possession between a finder and a locus owner absent the true owner; ruling for the finder is equitable since the court wants to reward honest finders (as opposed to dishonest finders who hide the found article), but ruling for the locus owner is more likely to increase the chance of finding the true owner (since true owners can trace back their trail). In the face of the challenge, the court resolved the problem with the magic word of “mislaid” property—distinguished from “lost” property and “abandoned” property—and ruled for the locus owner.

IP Law and the Piracy Paradox

The rigidity of rule of law is even more pronounced in intellectual property, and the utilitarian justification of strong IP rights has become a slogan: “copying stifles innovation” (Raustiala and Sprigman, 2). We have all become familiar with the argument that says strong IP protection safeguards incentives for innovation and investment, not only from reading cases but also from highly-publicized response of the music and the movie industries to copying. The piracy paradox presented in the article clearly runs counter to the argument, and it underscores the huge gap between what the law says and what it does. The authors’ observation of the high-IP regime in Europe undoubtedly exposes the gap; both the EU law and the national law of European nations provide broad protection of apparel design, yet the number of registered articles and litigations remain small while copying remains plentiful.

Although the authors are appropriately cautious about limiting the implication of the paradox to the fashion industry, they suggest that the paradox may exist in other industries that are in the “negative space” of IP law, such as recipes and furniture designs. They assess, and I agree, that further investigation of those industries may show creative variations of IP law that caters to distinct nature of the content. Perhaps, the paradox of the fashion industry is only a paradox because our thoughts are limited within the boundary cast by “the rule of law” of intellectual property. Copying may not stifle innovation, and the amount of innovation in an industry may not even have to be the winning standard of judgment.

Conclusion

The piracy paradox of the fashion industry is presented as an unusual and important challenge to the orthodox view of IP that promulgates necessity of strong legal protection. The paradox demonstrates the folly of mechanically applying “the rule of law” in property and intellectual property regardless of nature of the content. As Arnold has said, we do not have to be “absorbed in the search for the magic formula of universal truth”; rather, we could perhaps explore beyond the boundary of the dominant rule of law and reach a practical solution to the challenge.

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