“In China, people don’t pay for the software,” Bill Gates told a crowd at the University of Washington back in 1998. “As long as they’re going to steal it, we want them to steal ours. They get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.” Gates was suggesting that there’s such thing as productive piracy, or, at least, that it could be worthwhile for a company to stand down instead of combating every single intellectual-property violation.
It’s often thought that counterfeits and knockoffs eat into sales and demand legal attention, and people who try to limit the reach of copyright law are often said to be anti-innovation. There’s no shortage of evidence for this claim: Just two weeks ago, a paper examining Italian operas from between 1770 and 1900 found “a significant increase in the number of new operas” after copyright law was adopted and strengthened.
While counterfeits do take away from the sales of the originals they parrot, they at the same time spread awareness of the imitated brand. This positive pull has typically been thought to be negligible when compared to the magnitude of sales lost, but a study published in August in Management Science by University of British Columbia business professor Yi Qian suggests that, under the right circumstances, that positive effect can outweigh the losses.