Copying Your Competition: Good For The Economy, Experts Say

Sept. 12, 2012 -- When a competitor copies somebody else's product, is that a good thing or bad?

Very, very, very bad, said a federal grand jury in Apple vs. Samsung. It found Samsung owed Apple damages in excess of $1 billion for, among other things, making phones and tablets whose features and rounded corners aped too closely those of Apple's.

The court's decision, said David Hsu, professor of management at Wharton, will have the effect of strengthening the branch of patent law that protects design (as compared to functionality). "There seems to be," he told a Wharton interviewer, "a broadening of the protection of design elements."

That's exactly the wrong direction the law should be heading, say the co-authors of a new book.

In "The Knockoff Economy: How Imitation Sparks Innovation," Kal Raustiala and Christopher Sprigman argue copying is the wellspring of innovation. And more innovation, they say, is what the U.S. has to have in order to keep competitive in the world economy.

"Copying has unappreciated upsides, as well as the downside we're all familiar with," Raustiala, a professor of law at UCLA, tells ABC News.

People's view of the lone inventor (or lone dress designer, or comic, or any kind of creator) is wrong, the authors argue: Edison's light bulb may have contained a vacuum; but it was not created in one: Edison drew on the work of rival inventors who had created other bulbs. By tweaking theirs, he arrived at his—and immortal success. "It's freedom to copy," says Raustiala, "that enables incremental innovation."

He and Sprigman, a research professor at the University of Virginia School of Law, believe that to restrict the freedom to copy any further than it already is restricted under U.S. law, would be an economic error.

"It's not that we're against copyright or patent," says Raustiala. "It's that we don't think more is better."

To make their case, the two cite a wide and surprising variety of fields where copying is both common and generally legal, yet where innovation nonetheless flourishes.

In women's fashion, Raustiala says, there is nothing that legally prevents Forever 21 to copy, if it wanted to, a Gucci dress, provided Forever 21 put its own label (not Gucci's) in it. Gucci's label, he explains, is protected under trademark. In the dress-making business, this kind of copying goes on all the time.

In the restaurant business, a chef legally can knock off a competitor's molten chocolate cake, so long as he doesn't steal the recipe. No law prevents football coach 'A' from copying the plays of 'B.'

In these fields and others, say the authors, creators rely on extra-legal means to protect their innovation long enough to profit from it. In the world of comedy, for instance, the exact wording of a joke is protected under copyright (though its premise is not). What constrains one comedian from stealing another's act outright, is a professional understanding that ripping off someone else's act (Milton Berle notwithstanding) is wrong.

Raustiala allows as how an individual creator may sometimes suffer harm by having his work knocked off, but that the upside is an industry where innovation thrives. "It's a public policy issue," he says. "We do not need to create more protections. The issue ought to be: How do we get more innovation?"

Apple vs. Samsung, he thinks, "swung way too far" in the wrong direction by strengthening protection for a product's shape.

Much of Apple's profit, he and Sprigman say, derives from its success at tweaking other people's innovations. Steve Jobs himself they call one of the all-time great tweakers—and someone who had no compunction about borrowing (legally) the idea for the mouse and graphical interface from Xerox.