Under current copyright law, fashion designs can’t be copyrighted. This is why it’s possible for stores to sell “knock-offs” of original designs. Of course, a replica maker isn’t allowed to put trademarked labels on the new works, but the details of the design (such as a novel shape of skirt or a jacket tail) can be freely copied without penalty.
This article and discusses the resultant economic effects, albeit with a utilitarian slant.
The explanation as to why fashion can’t be copyrighted is also interesting:
Why can’t designers copyright clothes? Essentially, the law says that anything that is inherently useful can’t be copyrighted. Because clothing is designed to cover the body (most of the time), it remains a utilitarian object. Items that can be separated from the clothing, such as a trademark, can be copyrighted. Hence, the horseback polo rider on Ralph Lauren clothing is copyrightable, while the polo shirt it rests on is not. A similar policy applies to handbags, which explains why Louis Vuitton, Coach, Fendi, and others liberally sprinkle trademarks all over the leather or fabric used in the bags.
I’d be curious if others think this is a proper application of intellectual property rights in this particular context. (I myself don’t have a well-formed opinion yet.)