🕒 This essay is more than 10 years old (Published Oct 13, 2015).
Meds, clothes, and intellectual property. Probably the last three words you would imagine together in a sentence. But, as preposterous as this may sound, I would say that the fashion industry can learn a lot from the pharmaceutical industry. These two seemingly disparate worlds actually have something in common—a market failure: unstable and undefined intellectual property (IP) rights.
To disentangle this paradox, we need to dissect the IP issues in both industries, and then draw a two-fold comparison to show how current IP challenges in the pharmaceutical industry can actually be analyzed to build foundations for IP policy-making in fashion.
I definitely do not aim to offer sound policy for rectifying these issues in both industries, but I do think it’s valuable to point out why a very notorious industry, known for its highly competitive and sometimes unscrupulous regulatory processes, should be seen as a template for protecting the work of fashion designers, people who unfortunately often live at the blurry intersection of art and commerce.
Unstable and Undefined Intellectual Property Rights in Fashion
Why would one even think about this issue in the fashion industry? Well, more than anything, there is an economic importance. A 2008 report from the U.S. Census Bureau estimated $217 billion in annual sales from clothing and accessories, while shoes generated $27 billion through retail. A more recent report in The Legal Intelligencer cites $300 billion in sales as the industry’s annual revenue, which shows that the industry contributes a significant amount of revenue to the US economy and that the sales are likely to continue growing.
Despite its economic importance, at the same time, the industry lacks well-defined and established laws and policies that protect intellectual property in US-based fashion, which can easily allow others to copy ideas in fashion without significant repercussions. This, however, is not the case with non-US branches of the fashion industry, such as the European one, where fashion designs can receive up to twenty-five years of protection.
Recently, there have been few attempts at solving the issue of intellectual property in fashion through copyright, but they have all, unfortunately, failed. For instance, The Design Piracy Prohibition Act of 2006 never passed from Congress to the next steps approval, and the Innovative Design Protection and Piracy Prevention Act of 2010 was placed on the Senate Legislative Calendar at the end of 2010, but has not since moved forward. The Innovative Design Protection Act of 2012, which would have allowed protection of fashion designs up to three years, was introduced at the end of 2012 but was never passed.
While fashion designs themselves cannot be protected by copyright, some aspects—unique prints, patterns, and color arrangements—can be protected “only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article,” according to the U.S. Copyright Act.
Of course, one can immediately see how this vague rule can be easily surpassed to copy an idea without creating ground for litigation. For example, in a hypothetical situation, if a designer uses a triangular color-blocking pattern—a pattern that is not novel—to create a novel line of color-blocked scarves, which no one has presumably thought of before, the designer will not be able to protect neither the color-blocking scarves nor the design as the triangular color-blocking pattern might not be identified separately from the utilitarian aspects of the scarves. An obvious global example is Burberry’s popular cashmere scarf in heritage check, whose characteristic pattern can be easily replicated with only slight modifications and used to sell unbranded, Burberry-like scarves on popular commerce websites, such as Amazon.
Designers can partially rectify these issues by turning to trade dress, a part of trademark law governed by the Lanham Act, or design patents, which are available under the U.S. Patent Act. Trade dress allows designers to protect their brand names and logos, as well as the visual characteristics of a product if they denote the source of the product to consumers and if they are not functional, which effectively excludes apparel since apparel designs are considered to be functional.
Design patents, on the other hand, will protect the look of a design and ornamentation as long as “it is novel, nonfunctional, and nonobvious to a designer of ordinary skill in the art.” Once again, it is clear that there is great degree of freedom in interpreting this statement, essentially leaving designers without a guaranteed safety net. On top of that, design patents are generally not applicable to apparel because of its functionality.
You still might be thinking: why does anyone care? After all, if a person is a loyal Oscar de la Renta customer, for instance, it is reasonable to assume that they would not bother looking into non-original garment that’s sold for less. While the assumption is valid, as it was shown in BBC’s popular 2007 documentary The Secret World of Haute Couture, there is only a very small and exclusive global community that religiously attends designers’ publicly-inaccessible runway shows and that purchases these exclusive designer garments.
The rest—in fact, the majority—of the population has easy access to non-original products, which can be classified into: counterfeits, knockoffs, and generics.
Counterfeits are those products that are produced with the intent of being sold as originals, while knockoffs are derivative products that are not meant to be sold on the black market as originals, but they have been designed by adopting one or many ideas from an original product.
For instance, using again the example of Burberry’s popular cashmere scarf, a counterfeit would be a replica of the scarf that’s illegally marketed and sold as the original one, while a knockoff would be a Burberry-like scarf that’s sold on Amazon under a different name.
It is therefore clear how a counterfeit might negatively impact revenues and profits of a branded fashion house, but one might naturally wonder how high-end fashion knockoffs can have a negative impact if they are marketed under a completely different seller, such as a retail-clothing company.
As Ferrill and Tanhenco describe in their paper, knockoffs are not prohibited by any U.S. law—while counterfeits are regulated by trademark law and the Lanham Act—which means they are even more dangerous for the world of fashion, because they hurt designers both economically and creatively.
Particularly, the knockoffs can hurt designers economically because those customers who are willing to pay enough for a high-end fashion product, but also do not mind purchasing a knockoff, will buy the knockoff at a lower price, which will effectively decrease designers’ revenues. As a consequence, knockoffs will also negatively affect the creative side of designers’ works; without protection over their creations, the designers will lose incentive to invest in developing novel designs.
One can think of a situation where this would be particularly relevant—if the creation of novel clothing line requires high costs of production due to a specific material or intricate pattern-making process, a designer might not have the incentive to incur high costs if the product can be easily copied and sold as a knockoff in retail-clothing stores, such as H&M or Zara.
Finally, one can think about the long-term negative impacts in this industry caused by the lack of strong protection over intellectual property. While counterfeits and knockoffs represent immediate threats to designers and high-end fashion houses, it is important to understand that there is a third type of threat—not yet presented and analyzed in the literature—which comes from products that have lost their patentability potential due to their overuse over an extended period of time.
I call these fashion items generics as they are closely comparable to generic drugs in the pharmaceutical industry, drugs marketed under their chemical name that are identical to corresponding brand drugs in qualities such as dose, strength, and efficacy. It is easy to see how generics can develop in fashion if there is no firm protection over a new design and product. For example, if a designer creates a trapezoid-neck t-shirt, which has presumably not yet appeared in the world of fashion, and is unable to protect this unique design, the t-shirt will be able to get copied as a knockoff in the near future and finally become a generic in the long run.
Put differently, after an extended period of overuse in the retail-clothing industry (assuming that the product prevails throughout multiple seasons), the concept of trapezoid-neck will become obvious and not new, effectively annulling the patentability of the original design idea.
Generics do not economically impact designers and high-end houses in any different way than knockoffs do, because they stem from knockoffs, but they can hurt them creatively in a significantly more damaging way. If designers fear that their unique designs will become generic due to uncontrollable production and imitation, they will not have any incentive to reveal their ideas to the world of fashion. This, in turn, can impact the overall economy by not bringing new high-end products to the market and it can negatively affect the creativeness of the industry—simply because the designers’ ideas might be left concealed and unrealized.
So, we can identify the reason why the fashion market experiences economic and creative instability: because there isn’t a cohesive U.S. law that would establish relevant policies for rectifying the issue of intellectual property in fashion. How would we go about fixing this? This is when it is worth looking at a similar problem in the pharmaceutical industry to draw a parallel and and learn whether any IP principles from pharma can be applied to fashion.
The Issue of Intellectual Property Rights in the Pharmaceutical Industry
The pharmaceutical industry, despite its seemingly irrelevant connection to the fashion industry, faces a similar problem. Specifically, as the result of the industry’s prominent focus on research and development, especially in the field of drug development, patents are viewed as valuable assets and reliable representatives of a company’s standing in the market.
As Grabowski describes in his paper, it takes several hundred million dollars to discover, develop, gain approval, and finally send a new drug to the market. The costs of R&D are significantly high because most new drug candidates never actually reach the market due to various reasons, such as toxicity, manufacturing difficulties, and economic and competitive factors.
Even more importantly, if there is no patent protection over a new drug, imitators can easily duplicate the drug for very low costs. The costs of investing in research and developing new drugs can therefore often seem daunting to pharma executives who are aware that, especially in the field of drug development, rapid reverse engineering can lead to easy imitation of any compound.
Given that patents are currently used in the pharmaceutical industry to address these problems, one might wonder whether there is truly any similarity between fashion and pharma. It is certainly true that patenting has already been in use to protect new drugs during development, but the real issue is that pharmaceutical companies often do not have bandwidth to maintain a dedicated IP team that can strategize and help the pharmaceutical company extract meaningful profit from the generated IP.
Furthermore, any drug-producing pharmaceutical company also has to draw a distinct line between original products and those that enter the market and negatively affect company’s revenues, such as counterfeit drugs, derivative drugs, and low-cost imitations more commonly known as generics, which enter the market after the original drug’s patent has expired. These products are analogous to counterfeits, knockoffs, and generics in fashion as is evident from the following analysis.
Counterfeit drugs are fake medicines that are sold illegally under the same brand name of the original drug. As FDA describes them, they can contain the same ingredients as the original drug—although they might have no active ingredient at all—but the ingredients are incorporated at the wrong dose. One can see how they are analogous to counterfeits in the fashion industry, which are also marketed as high-end products but they usually lack in the quality or intricacy of the original design. Certainly, counterfeit drugs negatively impact the pharmaceutical industry because they can directly affect the company’s profits if they succeed at entering the market illegally and deceiving the customers.
While the term “knockoff” is not officially used in the pharmaceutical industry, and is often interchangeable with the term “counterfeit”, I use the term knockoff drugs to refer to those products that are derivatives of the original product with slight changes. For instance, a drug can be a knockoff if it performs a similar function as the original brand-name drug but has some properties changed, such as its functional groups, thermodynamics- or kinetics-based properties.
The damaging impact of these types of drugs is clear—they are not directly infringing on IP rights of the brand-name drug’s company because the knockoff drugs have different properties, but they are effectively a variation on a theme and, as such, exploit the high costs incurred by the brand-name drug’s company for R&D. Just like the knockoffs in fashion industry, which hurt designers both economically and creatively, knockoff drugs can hurt the pharmaceutical industry if companies do not ensure that their patents protect a broad spectrum of intellectual properties.
Finally, generic drugs are identical copies of brand-name drugs that enter the market after the original drug’s patent has expired. According to the FDA, they are important options that allow greater access to health care for all Americans. For the pharmaceutical industry, they can be perceived as the least threatening option because they cannot legally enter the market before the expiration of the original drug’s patent; in other words, there is an extended period of time for the brand-name drug to generate revenue before generics enter and become competition.
However, one can see how generics would be a problem for pharma if there was no clear patenting system available, which is currently the case with fashion industry. Generic drugs would immediately enter the market and, after their use over an extended period of time, annul the aspects of novelty and non-obviousness for the original brand-name drug and therefore diminish its patentability.
Sadly, this is indeed currently an issue in the fashion industry, where knockoffs can immediately lead to development of generics without leaving any time period for the high-end products to succeed at generating maximum revenue.
In her paper, Vinita Radhakrishnan proposes two strategies of strategically protecting intellectual property in the pharmaceutical industry that can rectify the previously-mentioned issues in pharma and maximize profit, and that are relevant to the examples of counterfeits and knockoffs in the fashion industry.
She proposes the use of trade secret protection for those products that are difficult to reverse-engineer or those that have value because of their secret nature. She uses an example of a biomarker that can assess the efficiency of a drug three times faster than a regular compound, and as such, can be used to optimize the company’s development, which means it should not be accessible to the public.
If placed under trade secret, the biomarker will be protected as long as the secrecy is maintained; in other words, the protection is not limited by term. On the other hand, if the biomarker is patented, the company will likely run into difficulties because the use of biomarker by another firm is difficult to audit. It is worth looking at how Radhakrishnan’s advice can be used to address the issue of counterfeit drugs.
As most drugs are easily reverse-engineered, trade secret protection could be used for those compounds that a pharmaceutical company uses as a crucial part of its drug development. As a critical component of the drug development process that is protected under secrecy, this compound will ensure the uniqueness of the developed drug so that its function cannot be copied easily. While this likely will not prevent all counterfeit sellers from distributing fake drugs to the market, it can certainly make the process harder because the difference between the original drug and counterfeit drug’s functionalities will be augmented with trade secret protection.
Conversely, patenting will work best for those products that can be easily reverse-engineered, such as a drug molecule or synthesis process. As Radhakrishnan describes in her paper, patenting does provide strong protection under law, but it comes at the expense of limited protection term, high protection and maintenance costs, as well as many exceptions to the definition of patentable matter. More importantly—and the most relevant aspect of patenting in pharma to fashion—is the drafting of specification.
Radhakrishnan suggests that the drafter of a patent should ensure that the patent is drafted to maximize the broadest possible scope while not infringing on neighboring patents. Her suggestion addressing this particular aspect of IP protection is crucial for knockoff drugs: the broader the scope of the patent is, the harder it will be to develop a derivative of the drug that’s not infringing on IP rights of the brand-name drug’s company.
It is important to note that patenting does not always benefit the entire industry. Another problematic aspect of biological research, which is an indispensable component of both the pharmaceutical and biotech industry, is the issue of anti-commons. As Michael Heller and Rebecca Eisenberg noted, too many IP rights in the upstream portion of R&D can hinder the development of downstream R&D.
According to their findings, product-developing companies have to incur high transaction costs to identify and clear rights, while academic scientists—unlike commercial scientists, who face similar problems to those of product-developing firms—seldom face patent enforcement, even when they ignore them. However, scientists in both the commercial and academic settings have trouble gaining access to materials and data that they can’t easily replicate in their own laboratories.
One can see how this essentially leads to a paradoxical problem: too many patents and high transaction costs can weaken the enforcement of patent rights, thereby increasing the possibility of unauthorized access and use, which effectively decreases the risk of anti-commons. At the same time, if the owners of the patent successfully exclude others from gaining access to their materials, users will have to incur high costs to gain access to the materials, thereby decreasing the possibility of unauthorized access, which increases the risk of anti-commons.
In their paper on intellectual commons and property in synthetic biology, Oye and Wellhausen succinctly summarize this issue through a four-quadrant graph that distinguishes private from public ownership, and clearly defined rights from ambiguously defined rights. As they describe, synthetic biologists mostly agree that processes such as protocols and design methods should fall within public ownership with clearly defined rights, while commercializable devices should also have clearly defined rights, but should fall within private ownership. They all agree that ambiguously defined rights, both within public and private ownership, serve as a threat and danger to development in the field.
Looking at all these issues together, it’s clear the pharmaceutical and fashion industry face similar problems—despite the differences between their internal operations and overall purpose. While the fashion industry’s operations focus primarily on design and transformation of raw materials, such as cotton and fossil fuels, into functional products, pharmaceutical industry places heavy emphasis on health-oriented research and drug development. Nevertheless, both industries have to combat the challenge of intellectual property rights.
Applying lessons from pharma to development of IP policies in fashion
The two most promising solutions to designers are design patents and trade dress, but as it was mentioned earlier, they are not applicable to apparel due to its functionality. Therefore, there needs to be a clearer set of policies that can protect apparel as well since, given the statistics shown earlier, apparel generates a greater percentage of revenue for the U.S. fashion industry. Using the issues and suggestions presented in the section about IP issues in pharma, one can think about potential solutions to the IP problems in fashion. My goal here is to provide suggestions for mitigating the negative effects of counterfeits, knockoffs, and generics in the fashion industry.
While counterfeits are regulated by trademark law, designers have no protection over their design process, which means that they have to keep their designs in complete secrecy until the designs are presented in runway shows or until they are worn by celebrities in public. Even so, sellers can still replicate the product and its design process because it would likely be difficult to prove that a person was replicating a fashion garment for the purpose of selling it on the black market.
Using a concept similar to trade secret, presented by Radhakrishnan in the case of pharma, policy makers should develop a law that protects the entire design technique and treats it as a secretive process. Because the design process is not similar to a synthesis process, and would therefore be difficult to reverse-engineer, it should be placed under an act that fully protects it without any time limit.
This way, if designers are using unique materials or an intricate production process, they can protect the “upstream” levels of their design technique, which would likely discourage others from attempting to obtain the same materials and knowledge about the design process. Of course, an illegal seller could still find a way to try replicating the garment, but by having a law that protects the design technique and process, designers would make this endeavor far more difficult.
Developing policies for knockoffs is a lot trickier. Drawing a parallel to the pharmaceutical industry, knockoffs can be seen as derivative products that are easy to reverse-engineer: because they won’t be exact replicates of a designer’s original garment, they are quite easy to develop through imitation. A knockoff designer simply needs to copy a single visual idea from the original designer and find a way to subtly incorporate it into a mass-production, ready-to-wear product.
It makes sense why designers would want to have patents over their final products in this case, but that doesn’t mean they should be granted these rights easily. To understand why this might be the case, it is worth looking at two examples of high-end fashion where patenting would not have benefited the fashion industry.
In a recent famous case Christian Louboutin v. Yves Saint Laurent (2012), Christian Louboutin sued Yves Saint Laurent for selling all-red shoes, which—according to Louboutin—looked similar to Louboutin’s women shoes with red soles and different colored tops. While the court ruled that Louboutin can have trademark protection over shoes with red soles, it did not grant Louboutin permission to claim trademark over monochromatically red shoes.
This exemplary case highlights how the concept of anti-commons could also become present in fashion if patenting was used more freely. More precisely, because fashion is a form of art, it is hard to distinguish what deserves to be patented, as patenting art forms can easily exclude others from using them in a way that’s originally intended to be non-restricting.
Simply put, it is reasonable that the court didn’t give permission to Louboutin to have trademark protection over monochromatically red shoes because that would essentially imply that Louboutin could sue any designer in the future who incorporates color red in their shoes. If designers are allowed to place strong protection over their final products, it can hinder other designers’ creativity and prevent progression of fashion.
Another example is Yves Saint Laurent’s famous “Mondrian” day dress, a wool jersey in color blocks of white, red, blue, black, and yellow, which was Saint Laurent’s adaptation of Piet Mondrian’s famous painting “Composition II in Red, Blue, and Yellow.” The dress has become one of the most important pieces in the history of fashion, yet—even though it is a high-end fashion product—the dress is a knockoff of another artist’s work.
It is unlikely that fashion connoisseurs today would consider this to be a non-inventive knockoff, but the dress undeniably represents an issue that the fashion industry is so fervently trying to combat today. So, once again, placing a patent over any design or visual feature to simply prevent creation of knockoffs would certainly hinder progression of fashion, leading to a “fashion anti-commons” issue, which is why it makes sense to have exceptions when defining patentable matter in this field of work as well.
With that in mind, what is the right way to approach this issue and still preserve designers’ intellectual rights? One way to develop a set of potential solutions is to use the framework presented in Oye and Wellhausen’s paper.
Currently, the U.S. fashion industry is having problems in the territory of intellectual property rights because the policies are based in the two quadrants of ambiguously defined rights. Policy-makers need to establish laws that can move fashion-oriented policies into the other two quadrants, by clearly defining rights for designers so that it’s transparent what can be a designer’s private ownership and what should be “intellectual commons.”
Of course, there are many ways to categorize aspects of fashion design into these categories as these decisions would be highly subjective. I propose one potential solution: categorizing these aspects in terms of structural and visual non-obviousness and innovativeness. The goal of the following policy template would be to provide designers with a firm set of rules, which would not allow for any ambiguity when deciding whether one should claim patents over their creations.
If the structural design of any fashion product, from simple accessories to apparel items, is non-obvious, and has therefore never been used before, the designer should be allowed to claim patent over such creation. For instance, in a hypothetical situation, if a designer has created trapezoid-neckline T-shirts, which therefore showcase a structural feature that has presumably not been used in fashion before, the designer should be able to protect the trapezoid-neckline structure so that this feature cannot be used by other high-end or retail-store designers who would want to mimic the product. Therefore, the designer would have private ownership over the product with clearly defined rights.
On the other hand, visual features of the product that do not in any way represent a designer’s official logo or any symbols that are officially recognized as the designer’s trademark visual features should not be patentable. In another hypothetical situation, if a designer created a line of simple dresses—which are not structurally non-obvious—that showcase an arrangement of colors gold, black, and white in a non-innovative way (for instance, a simple juxtaposition of colors along the dress), the designer should not be able to claim a patent over this dress. This way, visual characteristics, such as common patterns and colors, would be placed in the quadrant of public ownership and would constitute “intellectual fashion commons,” those aspects of design that can be used freely by all designers.
One exception to the latter rule would be the use of visually non-obvious and innovative patterns. For example, if a designer created a line of dresses that featured a specific tri-color arrangement on each dress, such that the first color was contained in an all-over triangular form, the second color was contained in an all-over circular form, with the rest of the dress featuring the third color, the designer should be able to claim patent over this specific visual arrangement, but not over the entire dress and the colors used on the dress.
Applying this rule to the Louboutin vs. Saint Laurent case, Louboutin would be able to claim patent over shoes whose soles have one color that’s different from the color of the rest of the shoe. This would prevent other designers from painting the soles of their shoes with one color, but it would still allow them to use the color for changing other features of the shoe. Therefore, this exception can be viewed as sitting in the area of clearly-defined rights, but halfway between private and public ownership because it will require a professional’s objective assessment of the visual feature’s non-obviousness and innovativeness.
Finally, as generics develop from knockoffs after the knockoffs have been used in fashion for an extended period of time, clearer policies that address knockoffs will consequently hinder development of generics. If designers are able to place strong protection over their designs and ideas, there will be an extended period of time in which high-end fashion products can generate maximum revenue before protection expires and before knockoffs enter the market and persist as generics in the long run.
Now, in the context of fashion at least, some of high-end products might survive only throughout few seasons. As a result, generics might never enter and prevail in the market if the “seasonality” of the high-end product expires before the protection over the product does. This, of course, can be seen as an additional benefit in the case of generics.
All this could certainly impose more creative protection, but I would be remiss if I didn’t acknowledge the drawbacks of my proposed solutions. While these suggestions might lead to firmer and more helpful policies for fashion designers, they would inevitably be unfair to those designers and ideas that warrant special exceptions. This is particularly true because fashion is a form of art, and developing policies for this field of work requires subjective—and therefore not always fair—decisions.
References
1. E. Ferrill, T. Tanhenco (2011), Protecting the Material World: The Role of Design Patents in the Fashion Industry, North Carolina Journal of Law and Technology, Volume 12, Issue 2.
2. Eisenberg, Rebecca S., Noncompliance, Nonenforcement, Nonproblem? Rethinking the Anticommons in Biomedical Research, Hous. L. Rev. 45, no. 4 (2008), (Symposium: Patent Law in Persepctive Institute for Intellectual Property and Information Law.)
3. Grabowski, Henry; Patents, Innovation, and Access to New Pharmaceuticals, Journal of International Economic Law (2002).
4. Jeffrey, Don and Timberlake, Cotten; Louboutin Wins Appeal Over Saint Laurent Red-Soles Shoes, Bloomberg Business; September 5, 2012.
5. Krause, Kevin; Feds in Dallas warn of knockoff products – including cancer drugs – hitting the market, Dallas News; August 19, 2015.
6. Oye, Kenneth and Wellhausen, Rachel; Intellectual Commons and Property in Synthetic Biology (2009), Synthetic Biology.
7. Radhakrishnan, Vinita; IP Strategy for Drug Discovery: A Dedicated Research Firm’s Perspective, Journal of Intellectual Property Rights, Vol. 17, September 2012.
8. Schuman Campbell, Christiane; Protecting Fashion Designs Through IP Law, The Legal Intelligencer (04/15/2015).