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Pearlstein

Making a Pitch, Striking Out

Steven Pearlstein
Washington Post Columnist
Wednesday, February 23, 2005; 11:00 AM

The Washington Post's Steven Pearlstein was online to discuss his latest column, which details the response he got from United Air Lines to a pitch for a new fare and other examples of litigation's effect on business.

A transcript follows.

Steven Pearlstein (The Washington Post)

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About Pearlstein

Steven Pearlstein writes about business and the economy for The Washington Post. His columns on the economy appear every Wednesday and Friday.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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Washington, D.C.: This is an interesting topic and one that has direct impact on newspapers, since they are always soliciting ideas for ways to serve their readers better. Naturally, there is a point where the exchange of ideas that is protected by the 1st Amendment collides with the protection of ideas under the Constitution's patent and copyright provision (Article 1 Section 9).

The Jello wiggle case is very interesting. What if consumers had written that the product was poisoning people and the woman just time stamped the letters and placed them in the safe? Besides, how can we know that only she had access to the safe?

Do corporations have a responsibility to read their mail?

Steven Pearlstein: All interesting questions. I suspect the employee probably had been instructed to have the good sense to pass along complaints while shielding the executives from "ideas." But the main point here is that companies have been bamboozled by their lawyers once again into over-reacting to legal threats at the expense of shutting out the possibility of receiving some good ideas.

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Arlington, Va.: So are we as consumers really missing out on anything here? I doubt that Average Joe is more likely to come up with the next breakthrough product/service than a company's internal R&D team.

Steven Pearlstein: I wouldn't be so sure about that. Pharmaceutical companies, sure. But consumer products and services are another matter. Ordinary people might not know how to produce these things exactly -- that would take expert knowledge. But how do the R&D departments know what to work on. They are told by the marketing department, which gets all its ideas from very structured inquiries. History shows, however, that many of the great, breakthrough inventions come from serendipity, people finding something they weren't even looking for.

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Laurel, Md.

Despite the legitimacy of your particular point in your case, doesn't the business lobby exaggerate the extent to which "lawyers" are the motivation for tort reform rather than persons harmed by businesses? I've collected a few (and I mean less than $10/episode) class actions from my credit card companies.

Steven Pearlstein: I don't want to get into the tort reform debate. As one caller correctly pointed out this morning, these suits by people claiming they came up with an idea aren't "tort" actions. On this one, however, I think the defense lawyers, representing the companies, have gone overboard, as they often do, seeking a legal safe-harbour at any cost.

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Washington, D.C.: I guess need to focus on the value of an idea and the strength of contracts. Had your idea taken off, would you really have been satisfied with a few tickets? Or would you have gone back -- possibly to the courts -- to collect more?

Steven Pearlstein: I would have been satisfied with tickets. But if it had really taken off and made a ton of money for the airlines, which I think unlikely, I would have hoped the people at the airlines would have had the sense of fairness that would have had them recognize my contribution in some way, maybe with a lifetime pass on all their flights or free/automatic upgrades. The problem with that, of course, is that their lawyers would not have let them do that, lest it be interpreted as an admission that they owed me something. The problem here is that legalisms have got in the way of people behaving in the way you'd want them to behave. The law really is an ass.

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Fairfax, Va.: Mr. Pearlstein - how do you see this problem in the overall context of decaying intellectual property rights? With technology helping so many people make illegal copies of music and movies, can "business methods" be far behind?

Steven Pearlstein: I'll have to disagree with you on this, although it would be good to hear from others out there as well. I think business method patents have gone way to far. The kind of common practices that you can patent now makes a mockery of the patent process, in my opinion.

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McLean, Va.: Hi Steven,

Your column today sounded familiar to me because (1) I am a middle-aged skier, and (2) I've recently had an internal business development effort -- in other words, an idea for a new service -- turned down.

In my professional life in the IT world, industry best practices include continued communication with users to identify their needs and wants, then evaluation of those needs and wants, and determination whether it is feasible to satisfy those needs and wants with new features and functionality. In my professional experience, I've found that users, aka, the customers, come up with ideas that I would have never considered. Companies should value the ability of their customers to think outside the box. Companies should encourage the customers to offer ideas, and should reward customers who contribute useful ones. However, any such reward should not rise to the level of compensation associated with a patent.

With regard to protection of intellectual property, I think a case can easily be made that the initial idea has little worth unless and until it is evaluated and developed to at least the level of a prototype or other means of proof of concept. And a patent is one way of proving diligence in developing an idea.

Steven Pearlstein: Well, those are all good points, particularly the one of compensation not rising to the level of what you would have to negotiate to license a patent. This is really a plea for a rule of reason on everyone's part. By the way, where have you skied this year?

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St. Louis, Mo.: I don't agree with an unspoken presumption of your story: That it can't be profitable for companies to use the good ideas of customers even AFTER fairly compensating them for it, as reflected in your comment, "...businessmen already inclined to think of the legal system as hostile and irrational. And not without reason", and then giving 2 examples of customers being awarded such fair compensation by the courts after the companies tried to swindle them out of it.

Steven Pearlstein: I don't presume anything. Some companies behave badly. And companies are hit by lawsuits that are specious. But the result of both things is that an important channel of communication between companies and consumers has been badly degraded.

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Washington, D.C.: Steven -- a gem of a column, thanks (and I said so on my blog www.intangibleeconomy.org). Sounds like you are calling for an approach to business process ideas something like the Creative Commons approach to copyright. DO you think the Creative Commons approach would work in this case?

Steven Pearlstein: Can't say I'm aware of it. What does it mean?

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washington, dc : Steve -

With all due respect, you are a journalist for the Washington Post. Check your facts before you publish your story. YOur idea was patented in 1998. (P.S. Fire your lawyer or hire me.)

Steven Pearlstein: You know, this is the sort of snarky note I get all the time that really drives me crazy. I am a journalist. I work very hard to write three columns a week on an incredibly wide range of stories. I have no secretary, researcher, assistant. How is the world would somebody like me know that my idea was patented in 1998. The Washington Post is a regional newspaper with a daily circulation of 600,000, give or take. It is not the Central Intelligence Agency. I'm glad to learn my idea was "patented" by somebody else, which in my opinion only goes to show how loopy the patent system is. Who holds the patent?

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Washington DC: Creative Commons is an alternative copyright registry (brainchild of Larry Lessig) that allows you to pick different levels of copyright protection (such as non-commercial use is permitted but only with attribution) and publicly disclose that fact in their registry. Many blogs have this feature (and the blog software MovableType automatically allows you to register with Creative Commons). The point is to create differing levels of IP protection for different cases - rather than the current "I own it all until you specifically ask me to do something different" approach.

Steven Pearlstein: Larry Lessig is a fascinating guy with many good ideas, and this seems to be one of them. Unfortunately, the world of intellectual property is dominated now by patent lawyers (like our last correspondent) who have trouble thinking outside their complicated little box, or by companies and industries that are perfectly willing to distort the entire system to benefit them in the short term.

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Washington, DC: The intent of the patent protection in the constitution was to provide an incentive for invention that would eventually help everyone generally. However, some things the founders probably didn't envision was a whole class of teenagers that want to become rich as rock stars and sports heros. The fact that most patents become the property of corporations or foundations is part of the reason no young people want to be inventors like Ben Franklin, Eli Whitney, or Alexander Graham Bell. So the part of the patent protection that should inspire people to invent is ground under by corporate lawyers, while the part that is not ground under has a negative impact by encouraging kids to become media mega-stars. We don't need to feel that music swapping services are destroying American culture as some would have us believe.

Steven Pearlstein: I'm not sure I agree with your last point, but the rest of your comment is right on. The patent system has been hijacked by the special commercial interests who have no one whit of concern beyond their own bottom line, and by the lawyers who now operate the system. For the music and entertainment industry to hold themselves out as the great defenders of innovation in this country is laughable.

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Bethesda, MD: As an engineer at GE for a number of years, I frequently was assigned the task of evaluating an unsolicited idea. I can honestly say that over 95% of them were completely worthless; they involved physically impossible effects or long discredited methods. Still, GE was diligent in following up and writing back to the submitter. I think most large companies are still careful with over-the-transom ideas. Given their deep-pockets, why would they take what could be a large risk.

Steven Pearlstein: I'm not surprised 95 percent of unsolicited ideas are worthless. But if the other 5 percent are worthwhile, I suspect the exercise is worthwhile for many companies. I didn't check with GE on their current policies. Being careful with unsolicited ideas is one thing. Walling yourself off from them is another.

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Steven Pearlstein: That's it for today, folks. See you next week.

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