In ‘The Knockoff Economy,’ The Upside to Ripping Off Others’ Ideas

Is it theft, or an integral part of innovation? In their new book, authors Kal Raustiala and Christopher Sprigman examine the wider benefits of outright copying—in a restaurant.

Jeremy Sparig / Getty Images

Back in 2007, Ed McFarland opened a restaurant in downtown Manhattan called Ed’s Lobster Bar. For years, McFarland had been the sous chef at the popular Pearl Oyster Bar in Greenwich Village. Pearl’s chef and owner, Rebecca Charles, built a following based on her excellent seafood, elegant but spare New England coastal décor, and signature Caesar salad.

Eventually McFarland sought to strike out on his own, and when he did, he took with him a lot of ideas from his years at Pearl. At least, so claimed Rebecca Charles.

Shortly after Ed’s Lobster Bar opened, an angry Charles filed suit in federal court. She claimed McFarland had “pirated Pearl’s entire menu; copied all aspects of Pearl’s presentation of its dishes; [and] duplicated Pearl’s readily identifiable décor.” Ed’s Lobster Bar was “a total plagiarism.”

Perhaps most galling to Charles was the Caesar salad. When she taught McFarland how to make her signature dish, she said she told him “you will never make this anywhere else.” Ed’s Lobster Bar nonetheless featured a Caesar salad somewhat tauntingly dubbed “Ed’s Caesar.”

McFarland, of course, saw things differently. “I would say it’s a similar restaurant,” he told the press. “I would not say it’s a copy.”

The suit between Charles and McFarland was settled out of court. But the issues it raised continue to vex chefs. What makes a dish original? And should copying a chef’s signature dish be against the law?

The answers are unclear, but a lot of money is at stake. U.S. restaurants raked in more than $600 billion in 2011. And Americans increasingly care about creative flair in their food, obsessing over obscure ingredients on shows like Top Chef Masters and following the comings and goings of chefs in the dining pages of major newspapers.

Surprisingly, however, chefs have almost no rights in their creations. Recipes, no matter how original, are not protected by copyright. While a cookbook cannot be copied as a whole, the individual recipes can be republished by anyone—as a brief tour of popular cooking websites makes clear.

A dish ordered in a restaurant can be freely copied as well. Anyone can reverse-engineer a terrific dish , and recreate it elsewhere—whether they attribute it to the original chef or not. As any connoisseur of good food knows, this kind of copying happens all the time. Molten chocolate cake; miso-glazed black cod; fish in potato “scales” with a red wine and leek sauce—all of these and many more have been copied widely. Copying is everywhere in the world of cuisine.

This kind of copying is supposed to kill creativity. The central idea behind our copyright and patent laws is that if copying is allowed, creativity will dry up as copyists flood the market with cheap knockoffs.

The fight against copying is, as a result, a major focus in today’s information-based economy, and the federal government devotes a substantial effort to regulating copying. Just think of Napster and all the lawsuits—and new laws—aimed at stopping kids from downloading music. So too, increasingly, are rising levels of copying a bone of contention in our international relations, especially China.

Yet copying has not killed creativity in the kitchen. In fact, the restaurant industry not only survives despite copying; it thrives due to copying.

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How can copying be beneficial? Because copying can enable as well as inhibit innovation. When we think of innovation, we usually picture the lonely genius toiling away until he finally has his “aha!” moment. But in fact, innovation is often an incremental, collective, and competitive process. The ability to build on existing creative work is critical to the creation of new and better innovations.

Once we look, we see examples all around us. Apple took the idea of a mouse and an icon-based computer display from researchers at Xerox and tweaked it for home use. Disney’s Steamboat Willie, and by extension Mickey Mouse, was a sort of proto-remix of Buster Keaton’s Steamboat Bill. Thomas Edison’s lightbulb imitated elements from more than a dozen earlier bulbs. Shakespeare’s Romeo and Juliet borrowed from earlier writers—and West Side Story in turn drew heavily from Shakespeare.

This kind of copying often leads to more choice—many variations on a theme—and so is great for consumers. It can serve as a powerful form of advertising for originators, one that carries weight because it is authentic (who would copy a bad Caesar salad?) and may even grow the overall market.

Which brings us back to Rebecca Charles and Ed McFarland. Charles’s lawsuit was really about whether McFarland had copied the décor and overall look of her restaurant, not whether he could knock off her famous Caesar salad. (Recipes, recall, can be legally copied by anyone.)

But what impact did Ed’s copying have? As it turns out, five years after Ed’s Lobster Bar opened, Pearl Oyster Bar is still doing a bang-up business. And no fewer than three other seafood/raw bars have opened in the neighborhood. Ed’s knockoff didn’t kill the golden goose—and may have started a trend. Trends like these can be very valuable to firms.

Cuisine is not the only creative endeavor that has benefited from the freedom to copy. Consider a very different field: football.

When football started more than a century ago, it was a brutal game of straight-ahead running plays. The results were sometimes disastrous in an age when players wore little protection. In the 1905 college season, 18 players were killed. After viewing a photo of a mutilated player, President Theodore Roosevelt demanded change. The forward pass was born.

Passing changed football forever. The pass added a range of previously unimaginable complexities to the offense, which demanded new defensive countermeasures. The result has been a continuous wave of innovation. And a just-as-continuous wave of copying.

A great example is the “no-huddle offense.” In 1989, Sam Wyche, then-coach of the Cincinnati Bengals, had the seemingly crazy idea of employing a “hurry-up” offense, typically used in a game’s waning minutes, during the entire game. The offense became known as the No Huddle, and it worked exactly as it sounds—Wyche’s Bengals ran a very quick series of pre-scripted plays without huddles, all with the object of confusing and tiring the opposing defense.

The strategy worked brilliantly. So much so that it provoked anger among opposing coaches. In the days leading up to a playoff game against the Buffalo Bills, Bills Coach Marv Levy angrily asserted that the No Huddle was equivalent to cheating. But anger soon gave way to imitation. The following season, the Buffalo Bills knocked off the strategy and went on to play in four straight Super Bowls.

Yet no one has ever been able to monopolize any of the innovations that have periodically roiled the game. So why do football coaches continue to innovate, even when they know that their rivals will imitate them?

For football coaches, like chefs, copying is a central part of a process of incremental, cumulative innovation. Copying allows them to create better, more novel inventions.

Of course, copying can sometimes cause real harm, which is why we have copyright and patent law. But in many other cases, the benefits of copying more than outweigh the harms. And this is good news in a world in which copying is ever easier. In the creative fields, from fashion to food to finance to font design, imitation co-exists with innovation. If the future is going to be one of more, rather than less, copying—and everything to date suggests that will be the case—this is good news. These industries show us the ways in which innovation can continue to thrive in a knockoff world.

And this has implications for how we think about rules against copying in our increasingly ideas-based economy. Consider this: in the 1980s, Hollywood tried to eliminate a fearsome new copying technology—the VCR—that the industry’s chief lobbyist, the famed Jack Valenti, in a congressional hearing memorably likened to the Boston Strangler.

Contrary to Valenti’s prediction, of course, the home-video market became a huge moneymaker,, one that poured many more dollars into the film studios’ coffers than piracy was ever able to steal away.

As this history shows, getting policies right—or wrong—can have major economic effects. Copying is not always so benign—or lucrative. And rules about copying have an important, even essential role to play in our economy. But that role is much more nuanced than many believe. Major industries survive and even thrive in the face of copying, and in some cases copying makes them richer and more productive.

If we can begin to unlock that paradox, we can learn a host of important lessons about the future of innovation.

Reprinted from THE KNOCKOFF ECONOMY: How Imitation Sparks Innovation with permission from Oxford University Press, Inc. Copyright © 2012 by Oxford University Press.