What Can We Learn from IP S Negative Spaces ?

What Can We Learn From IP’s “Negative Spaces”?

Rob Merges

Abstract

In recent year, intellectual property (IP) scholars have described a number of fascinating trades and pursuits where people get along quite well without the protection of formal, enforceable IP rights. Some have taken to calling these, collectively, IP’s “negative spaces.” From these studies, a consensus theory has begun to emerge, which holds that the negative spaces show that IP law is far less necessary than many have traditionally supposed. The absence of IP, they say, not only fails to impede creative contributions in these areas; in some cases at least there is more activity because IP is absent. Here I make three modest points in response: (1) the aggregate value of the industries studied by negative space theorists is still quite small compared to the entire “IP economy”; (2) the most important industry studied, fashion, is one where many firms are actively lobbying for stronger IP protection – undermining the idea that they are more profitable in a low-IP, negative space setting; and (3) creative responses to the lack of IP may well be clever, but they do not prove the superiority of the absence of IP. While I do not want to minimize the creative ethnographies behind negative space studies, I would like to deflate at least somewhat the grander theoretical implications of this body of work.

Introduction

In recent years, intellectual property (IP) scholars have described a number of fascinating trades and pursuits where people get along quite well without the protection of formal, enforceable IP rights. From French chefs[1] to standup comics,[2] and from fashion designers[3] to tattoo artists,[4] creative people working in various industries develop norms and practices that provide an adequate, and perhaps often superior, alternative to formal IP protection.

Some have taken to calling these areas, collectively, IP’s “negative spaces.”[5] From these studies, a consensus theory has begun to emerge, which holds that IP law is far less necessary than many have traditionally supposed. The absence of IP, they say, not only fails to impede creative contributions in these areas; in some cases at least there is more activity. From a descriptive or positive beginning, in other words, negative space theory often moves to a more normative point: the essential wrongheadedness of the traditional story that IP rights are always and everywhere necessary to call forth creative works.

I want to make three modest points in response. First, the aggregate value of the industries studied by negative space theorists is still quite small compared to the entire “IP economy”. Second, the most important industry studied, fashion, is one where many firms are actively lobbying for stronger IP protection – undermining the idea that they are more profitable in a low-IP, negative space setting. And third, creative responses to the lack of IP may well be clever, but they do not prove the case for “negative space.” While I do not want to minimize the creative ethnographies behind negative space studies, I would like to deflate at least somewhat the grander theoretical implications of this body of work.

How Big is the Negative Space?

To estimate the size of the negative space, or at least that part of it that has been written about so far, we begin with French restaurants, to capture the value of French chef recipes. European restaurants represent 14.5% of the $147.5 billion annual “full service restaurant” category.[6] Although Italian restaurants are probably in fact more numerous, we might generously estimate that fully half this category is French restaurants. That means a $10.6 billion a year industry. Naturally enough some of the value of these restaurants comes from décor, location, etc.; but again to be generous let’s attribute all the value to recipes – and unique recipes at that. (In reality probably the bulk of the value is in “old standard” recipes but we will leave that aside).

How about tattoos and standup comedy?Tattoos are a $1.65 billion per year industry.[7]As for standup comedy, that is a bit harder to estimate. Comedy album sales average roughly $5.5 million per year,[8] and top standup comics makebetween $27 million (Jerry Seinfeld)[9] and $14 million per year (Kevin Hart). Forbes estimates the top comedians make $139 million altogether per year.[10]On the other hand the middle tier of comics make anywhere from $400 to $2000 per performance, with many of course working for free on open-mike events.[11]A generous estimate of the total size of the industry might be $50 million per year.[12] So, taken together, the three “negative space” industries discussed far total roughly $12.75 billion in revenue per year.

These are of course nontrivial numbers. But compared to the estimated size of the overall IP-based economy, they represent only a small percentage of activity. The International Intellectual Property Protection Alliance (IIPPA), for example, estimates that the “copyright industries” alone add $1 trillion to the U.S. economy each year.[13] It is very difficult to arrive at similar estimates for the “patent industries” because companies in so many industries obtain large numbers of patents every year. But we can say that the pharmaceutical industry is worth $ 340 billion per year alone,[14] and that the chemical industry totals roughly $450 billion.[15]

Changing Fashions?

Of course, I have so far skipped over the largest industry that negative space theorists have studied, fashion. A conservative estimate is that this is a $200 billion per year field.[16]Clearly this is an industry whose magnitude is much closer to the “copyright industries” plus pharma/chemicals. So where does fashion fit into discussions of the “negative space”? Perhaps the most important point to note in this respect is that the fashion industry itself seems quite motivated to escape the negative space. According to Scott Hemphill and Jeanie Suk,

The adverse effects of copying explain why many [fashion] designers oppose copying, just as they oppose counterfeiting of handbags. ([the negative space] argument, if correct, ought to apply to fashion trade-marks and copyrights as well.) [Raustiala and Sprigman] pitch their paradox as an explanation for the otherwise puzzling equanimity with which designers greet copyists. But that premise is faulty. In fact, many designers are vocal advocates against copying, and . . . make use of the currently limited legal tools available to curb copyists.[17]

In addition to enforcement using the established (though flawed) legal tools available, fashion designers have been active in lobbying for various new forms of design protection.[18] This lobbying effort is perhaps the best indicator that innovative firms are indeed not satisfied with the current copying-centric equilibrium in the fashion industry. As a number of scholars have noted, in fact, the speed and ease of copying have created a significant threat to the livelihoods of creative fashion designers, making future lobbying more likely.[19]

Viewed from the perspective of the evolution of IP protection, the fashion industry begins to look less like an instructive outlier and more like a very conventional industry.[20] As with many other industries, as the value of the creative products increase the calls for strengthened IP protection increase as well. It may not be long until fashion crosses the great divide from negative to positive IP space.

Negative Know-How: Learning from Negative Spaces

From all this I think there are two things we can learn. First, there is indeed room for IP-free zones – negative spaces in the fabric of IP protection. IP need not permeate every crease and corner of the economy. Negative space theorists have shown real creativity and resourcefulness in searching out and documenting examples of fields that survive and even thrive outside the shadow of IP protection. As with all empirical research, each case study adds to our understanding of how our economy and society actually function.

And yet, the other lesson from exploring negative spaces has to do with their limits. Most of the fields that negative space theorists explore are in reality fairly small-scale. They fit the description of property theorist Robert Ellickson, who some time ago noted that in “close-knit” groups, formal property rules were often less efficient than an effective set of social norms.[21] But, as Ellickson also noted, once groups grow beyond a certain size, and the economic value of their activities passes some threshold, informal norms cease to work. I believe this is as true for IP as for conventional tangible property. So, in the end, while we may have some interesting things to learn from IP’s negative spaces, the most important lesson in the end may be that each field, as it grows, ends up recapitulating the history of IP protection generally. Eventually, like a vacuum, the negative spaces are filled in.

[1]Emmanuelle Fauchart & Eric von Hippel, “Norms-Based Intellectual Property Systems: The Case of French Chefs,” 19 Org. Sci. 187 (2008) (arguing that recipes are better protected by self-enforced social norms than by intellectual property law).

[2] Chris Sprigman and Dotan Oliar, “There's No Free Laugh (Anymore): The Emergence of Intellectual Property Norms and the Transformation of Stand-Up Comedy,” 94 Va. L. Rev. 1787 (2008).

[3] Chris Sprigman and Cal Raustiala, “The Piracy Paradox: Innovation and Intellectual Property in Fashion Design,” 92 Va. L. Rev. 1687 (2006).

[4]Aaron Perzanowski, Tattoos and IP Norms, 98 Minn. L. Rev. (2013) (interviews with 10 tattoo artists reveal industry reliance on informal norms despite fact that tattoos may well be protectable by copyright; argues that assumptions underlying all of IP law “are empirically untested and myopically focused on a small handful of industries with legacy business models”).

[5]Elizabeth L. Rosenblatt, A Theory of IP’s Negative Space, 34 Colum. J.L. Arts 317 (2011).

[6] See IBISworld industry data website, avail. UC Berkeley and other subscribers.

[7] See

[8]

[9]

[10]

[11] John Wenzel, Comedy is Bigger Than Ever. But are the Profits?, Denver Post, July 1, 2012, avail. at

[12] This represents a tripling of the income of the top comedians, plus album sales.

[13] Figures such as these should always be taken with a grain of salt as they are (1) based on large aggregate data sources, and (2) prepared by interest groups with a string agenda. See “U.S. Copyright Industries Add $1 Trillion to GDP,” L.A. Times, Nov. 19, 2013, avail. at

[14] Wikipedia, Pharmaceutical Industry.

[15] .

[16] See C. Scott Hemphill & Jeannie Suk, The Law, Culture, and Economics of Fashion, 61 Stan. L. Rev. 1147, 1148 n. 1 (2009):

U.S. apparel sales reached $196 billion in 2007. The U.S. Apparel Market 2007 Dresses Up ... Way Up, Bus. Wire, Mar. 18, 2008 (reporting estimate by the NPD Group). Among fashion accessories, considering just one category, handbags, adds another $5 billion in sales. Tanya Krim, There's Nothing “Trivial” About the Pursesuit of the Perfect Bag, Brandweek, Mar. 29, 2007 (reporting U.S. sales ex-ceeding $5 billion in 2005).

[17] Hemphill and Suk, supra, at 1183.

[18]See, e.g., Note, Aya Eguchi, Curtailing Copycat Couture: The Merits if the Innovative Design Protection And Piracy Prevention Act and A Licensing Scheme for the Fashion Industry, 97 Cornell L. Rev. 131, 145 (2011) (“[A design protection bill from 2010] garnered support from several well-known designers and the Council of Fashion Designers of America (CFDA)— the creative core of the fashion industry . . . .”).

[19] See, e.g., Susan Scafidi, F.I.T.: Fashion as Information Technology, 59 Syracuse L. Rev. 69 (2008).

[20] See Robert P. Merges, One Hundred Years of Solicitude: Intellectual Property Law 1900-2000, 88 Cal. L. Rev. 2187 (2001) (describing IP protection trajectory of numerous industries through history).

[21] Robert Ellickson, Property in Land, 102 Yale L.J. 1513, 1520 (1993).