Furniture, Rent-Seeking And The Problem With Laws

Law often takes on a life of its own.

We see this all the time. First, parliament introduces a law to solve a public policy problem. Decades pass. Things change. Perhaps the problem might no longer be considered a problem. Technologies change. Opinions change. But it is easier to pass a bill than repeal an act. Special interests come to rely on the status quo. As a result, governments often reconceptualise why the law was first introduced in order to defend that status quo.

Nowhere is this pattern more obvious than in that cesspit of special interest rent-seeking that we call intellectual property law.

The United Kingdom has decided to increase the intellectual property protection for design – which covers manufactured artistic creations like furniture, jewellery, and architecture – from the life of the creator plus 25 years for registered design works, to the life of the creator plus 75 years. An extension of 50 years.

In practice this means design works will get the same length of protection enjoyed by other artistic creations. Furniture, architecture and jewellery designs will be treated much the same as songs and movies in copyright law. Once their protection expires, other manufacturers are free to reproduce the designs, as long as they describe their products as “replicas” or “reproductions” of original designs (lest they violate trademark law).

In Australia, furniture designers want the same changes. Here design protection lasts just 10 years. An Australian manufacturer told BRW in January that Australian design protection was inadequate. A spokesperson from the furniture manufacturer Herman Miller told Fairfax’s Domain last week that companies selling replica design furniture are “tricking the consumer and undervaluing the original design”.

There’s a lot of money at stake. The iconic Eames lounge chair will set you back about $8,000 if you buy an authentic one produced by Herman Miller. But the chair was first designed in 1956 and is long out of design protection. So you can get a replica of the Eames lounge chair for a tenth of that price from any number of retailers.

A licensed edition of the even more ubiquitous, and older, Eames plastic moulded side chair will cost the better part of $1000. Or you could pick up a replica for $80 or so.

Part of this price difference is due to quality. Another is the price of the brand – manufacturers are able to charge a premium for customers who want the real deal rather than an inauthentic product.

But none of that price difference is because the designers have to recoup the cost of the original design. It has been a long time since Herman Miller recouped the design cost on their lounge chair.

And that is all that matters. Justifying the UK change, the minister for intellectual property, Baroness Neville-Rolfe, argued it would right the “unfair” imbalance between manufactured designs and other artistic production.

But what does fairness have to do with it? Intellectual property law is not about being fair to furniture designers. Intellectual property has a purpose.

Standard economic theory says the market will under-provide creative products because creative products are easy to copy. To fix this, intellectual property offers creative producers a monopoly over their work. But that monopoly is only available for a time, because we, the consumers of creative work, have an interest in accessing and repurposing the back catalogue of human creativity.

All these caveats mean that intellectual property isn’t really property, as I’ve argued in the Drum before – it’s a regulatory workaround to an assumed market failure. It only has value insofar as it resolves that failure. It does not exist to funnel consumers into high-priced authenticity.

Furniture design is an example of a creative market that thrives despite lacking much of the intellectual property protection enjoyed by other creative works. Indeed, the fact that Herman Miller can still charge enormous sums for a design available at a tenth the price shows that both the cheap and expensive wings of the market can co-exist.

The availability of replica mid-century design means more people can enjoy better aesthetics at home. It is hard to see what public benefit restricting these designs to people who can spend $800 on a single side chair – as the UK government is doing – would provide.

Sure, on the scale of national politics, how long the design monopoly over Eames chairs should last is a pretty minor thing. But it is an informative one. If the government establishes privileges for one group others will want equivalent privileges.

The content of intellectual property law is almost never considered from first principles – that is, what do we fundamentally want our intellectual property regime to achieve. Rather, it is a scruffle of political power, long divorced from the theory of market failure and a textbook need for clever regulatory intervention.

The Coalition Government has spent the last few years trying to crack down on copyright infringement. If policymakers cared about the purpose of copyright protection they would only do so if it was clear that such a crackdown would lead to the creation of more new creative works. Of course there is no evidence that it will. But the holders of the rights to movies and music believe that pirates are depriving them of revenue. And governments listen because they’ve forgotten why copyright protection was introduced in the first place.

In other words, intellectual property has become its own justification. Put down your textbooks. This is how law works in the real world.