The Knockoff Economy: How Imitation Sparks Innovation

By in Intellectual Property on March 16, 2013

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From the shopping mall to the corner bistro, knockoffs are everywhere in today’s marketplace. Conventional wisdom holds that copying kills creativity, and that laws that protect against copies are essential to innovation–and economic success. But are copyrights and patents always necessary? In The Knockoff Economy, Kal Raustiala and Christopher Sprigman provocatively argue that creativity can not only survive in the face of copying, but can thrive.

The Knockoff Economy approaches the question of incentives and innovation in a wholly new way–by exploring creative fields where copying is generally legal, such as fashion, food, and even professional football. By uncovering these important but rarely studied industries, Raustiala and Sprigman reveal a nuanced and fascinating relationship between imitation and innovation. In some creative fields, copying is kept in check through informal industry norms enforced by private sanctions. In others, the freedom to copy actually promotes creativity. High fashion gave rise to the very term “knockoff,” yet the freedom to imitate great designs only makes the fashion cycle run faster–and forces the fashion industry to be even more creative.

Raustiala and Sprigman carry their analysis from food to font design to football plays to finance, examining how and why each of these vibrant industries remains innovative even when imitation is common. There is an important thread that ties all these instances together–successful creative industries can evolve to the point where they become inoculated against–and even profit from–a world of free and easy copying. And there are important lessons here for copyright-focused industries, like music and film, that have struggled as digital technologies have made copying increasingly widespread and difficult to stop.

Raustiala and Sprigman’s arguments have been making headlines in The New Yorker, the New York Times, the Financial Times, the Boston Globe, Le Monde, and at the Freakonomics blog, where they are regular contributors. By looking where few had looked before–at markets that fall outside normal IP law–The Knockoff Economy opens up fascinating creative worlds. And it demonstrates that not only is a great deal of innovation possible without intellectual property, but that intellectual property’s absence is sometimes better for innovation.

3 thoughts on “The Knockoff Economy: How Imitation Sparks Innovation

  1. Mark P. McDonald
    1
    11 of 11 people found the following review helpful
    5.0 out of 5 stars
    A compelling and fresh look at the idea of innovation and IP protection, August 19, 2012
    By 
    Mark P. McDonald (Chicago, IL United States) –
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    This review is from: The Knockoff Economy: How Imitation Sparks Innovation (Hardcover)
    Customer review from the Amazon Vine™ Program (What’s this?)

    This book explores the validity of the belief that innovation and growth only happen when there are strong protections against copying or duplication. The authors, both lawyers, make a compelling argument that IP protections like copyright, patents, etc. do not themselves create an environment of innovation.

    Creating `monopoly’ rights is not a requirement for vibrant innovation, growth and creativity.

    Rather than argue against IP protection, the authors provide examples of industries with low IP protections and a degree of copying that still have high levels of growth and innovation. In showing the positive, the authors provide a compelling and thoughtful view on the connection between protection and innovation.

    Raustiala and Sprigman discuss innovation and growth in industries as diverse as fashion, football; stand up comedy, medicine, cuisine, fonts and high finance. The analysis and discussion of each of these industries is first rate providing a balanced, evolutionary and focused approach. I learned much about these industries simply by reading the relevant chapters. I also gained a fresh perspective on the role and type of innovation that works best for most industries based on continuous tweaking rather than bold invention.

    This is a top rated book because of the summation and implications provided in the concluding chapter. Like any good TV attorney, the authors save the best for last. I recommend reading this book in the following order.

    1. The introduction, then
    2. The conclusion and the epilogue, then
    3. The first chapter and the rest of the book.

    Reading the conclusion second seems a bit disconcerting at times, but it brings a deeper appreciation to the arguments made in the middle chapters.

    Share this book widely across the executive suite. I highly recommend it to those in Product Development, Corporate Strategy, CIO, CMO, CEO, CFO and the Chief Corporate Council. Too often we all get set in our ways of thinking, translate everything into dollars and cents, and ignore the possibility of alternative ways of competing. This book combats all of these tendencies, providing a fresh look at an important fundamental issue: innovation and IP.

    The Knockoff Economy provides powerful arguments that require rethinking the view of intellectual property and creating deep disruption by changing industry terms. It is chocked full of useful concepts like the ‘fashion cycle’ the role of social and behavioral norms, six observations about innovation, IP and copying, etc.

    Be warned this is not a business book in the traditional sense. The authors are not selling a five-step program, a framework or a solution. Rather they point out the limitations of an existing and deeply held belief that innovation requires protection against copying. This is an argument that leads you to create your own conclusions, but in light of digitalization, innovation and the pace of change, we all need new thinking in this area.

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  2. 2
    9 of 11 people found the following review helpful
    5.0 out of 5 stars
    Challenges our preconceived notions about IP rights in a ‘low-IP’ economy, July 2, 2012
    By 
    Malvin (Frederick, MD USA) –
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    This review is from: The Knockoff Economy: How Imitation Sparks Innovation (Hardcover)
    Customer review from the Amazon Vine™ Program (What’s this?)

    “The Knockoff Economy” by Kal Raustiala and Christopher Sprigman presents an original, interdisciplinary study of the relationship between innovation and imitation. The author’s brilliant deconstruction of various creative industries succeeds in challenging our preconceived notions about the role of intellectual property (IP) rights in today’s increasingly “low-IP” economy. Thoroughly researched and accessibly written, this outstanding book is certain to be widely read and discussed.

    The author’s core argument is that creativity can do more than survive in a knockoff environment; it can thrive. The authors discuss three low-IP industries to shed light on the subject. We learn that in the fashion world, the skills of top designers become even more in-demand as knockoffs accelerate the cycle of innovation. The authors explain how the culinary arts embraces an informal system of professional courtesy and attribution which serves to enhance the prestige of the industry’s most creative top chefs. And in the stand-up comedy world, we see how the industry can quickly close ranks on renegade comedians who dare to steal original materials from others.

    At first glance, these case studies might seem to be purely situational. However, the authors show us how the key concepts gleaned from these studies can be applied to virtually any other industry. Among the many insights gained along the way, it becomes evident to us that a multi-layered strategy might be the most effective way to keep creativity and imitation in a harmonious relationship; as opposed to the single brute-force instrument of the lawsuit (which in the case of music file sharing, ultimately proved to be ineffective).

    In the Epilogue, the authors engage in an intriguing thought experiment where the lessons learned are powerfully applied to the music industry. The authors believe that music can prosper as a low-IP industry by fundamentally redefining its relationship with fans. It is suggested that this can be achieved in part through increasing consumer choice; which in turn might be made possible by embracing new technologies. To be sure, some of these ideas have been suggested elsewhere but what is different here is the author’s tight integration of their theory with workable solutions. Indeed, with more artists empowered to create and connect with the fans who most appreciate their work, the authors envision a bright future for the industry.

    I highly recommend this thoughtful, timely and influential book to everyone.

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  3. 3
    11 of 14 people found the following review helpful
    2.0 out of 5 stars
    Weakly argued, August 13, 2012
    By 
    brian d foy (Chicago, IL United States) –
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    This review is from: The Knockoff Economy: How Imitation Sparks Innovation (Hardcover)
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    This book begs the question that imitation spurs innovation, looking at fashion designers, chefs, comedians, football coaches, font designers, and bankers to support this point. Since they find at least some evidence of innovation in each of these areas, they conclude that imitation is responsible for it and not at all harmful. These are the same logical flaws that Pirate’s Dilemma has.

    The authors’ anecdotal support comes mostly from wealthy, established practitioners. It’s as logical as pointing to Jim Carrey and asking why all actors aren’t rich and successful. If this system works, why aren’t more innovators successful?

    Instead, they should examine what the situation would be if there were stronger protections. It’s not that I endorse that particular view, but if you want to prove that innovation is stimulated by imitation, you also have to prove that it’s stimulated more by imitation than it is without imitation. However, we can’t conduct that experiment easily. We don’t know if we are better off with imitation. Personally, I think we need some imitation, but, as they point out, there also needs to be social control. Chefs, comedians, and magicians are self-policing and particularly brutal about it, but these people know each other and eventually cross paths. However, a fashion designer can’t self-regulate against a nameless south Asian sweatshop selling through a big chain store (especially after various court cases making that illegal) or a knock-off vendor on a street corner because those imitators don’t care what business they are in as long as they get money. You can’t ostracize someone who doesn’t want to be in your group anyway.

    There’s very little said about the difference between people wanting to imitate to advance the art and people wanting to imitate for the sole purpose to make money. They acknowledge the first of those but don’t say much about the second. They don’t delve into the thorny problem of starving artists. If imitation spurs artistic innovation, why isn’t there more innovative artistic commerce? If comedians benefit from imitation, why are they so poor? Why do so many “creatives” need to have day jobs? There might be answers to those questions, but I don’t know what they are. I do know that we should be asking those questions.

    In my own area, open source software, which actually uses copyright laws to allow copying (they miss this subtle distinction), how do they explain that all of the open source imitation has yet to produce software as good as Photoshop or a desktop experience that regular people want to use? Why hasn’t open source software projects been more successful? There’s not much money in open source, and without money, people (“imitators”) aren’t motivated to do the boring bits of work that make something excellent. Do you think your knock off Gucci bag is the same quality as the real thing? Why wouldn’t the knock off “artist” take as much time and care to make the real thing? Why don’t they source the same materials? The answer certainly isn’t “for the advancement of the arts”.

    The knock-off economy isn’t the much different than what we’ve known forever. Most people want to do the least work with the least investment to make the most money. That there are some people (artists) who just want to create great things, and only a sliver of them were successful, doesn’t negate that.

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