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Steven Pearlstein

Lawyers Scare Firms Away From Good Ideas

By Steven Pearlstein
Wednesday, February 23, 2005; Page E01

It is gospel among management gurus that successful companies listen to their customers.

It is also gospel among corporate lawyers that when customers call up with ideas for new products, or for improving an existing one, the standard procedure should be to thank them for their interest and quickly hang up before they have a chance to blurt out their suggestion.

_____Live Discussion_____
Transcript: Pearlstein was online to answer your questions on this column.
_____Past Columns_____
News Media Grope for the Right Formula (The Washington Post, Feb 18, 2005)
Calling For Real Competition (The Washington Post, Feb 16, 2005)
Science Needs A Profit Motive (The Washington Post, Feb 4, 2005)
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I learned about that troubling contradiction recently in trying to interest United Air Lines in a new fare idea I had. My hope was that if United used the idea, it might reward me with a few tickets for my efforts.

The idea was pretty simple. Over the years, I've noticed on an annual ski trips out West that the plane was full of groups of other middle-age guys doing pretty much the same thing. Like me, they fantasized that the plane would land just in advance of a storm that would dump several feet of fresh powder on the slopes. And like me, they were rarely that lucky.

So what if, rather than requiring us to book such trips well in advance to get a reasonable fare, the airlines were to offer a Powderhound Fare: for 50 percent more than a typical discount fare, payable by Nov. 1, you get the right to fly to any domestic ski destination whenever you want, as long a seat is available. The promotions could read: "Don't pray for snow. Chase it!"

It is possible that this "idea" is actually an "invention" worthy of a "business method" patent -- the lawyers I consulted this week were divided on that. But even if the idea was unworthy of patent protection, many state courts have ruled that I would be entitled to royalties if I could show that the idea was novel and my interests in compensation apparent.

This is the sort of vague and open-ended legal exposure that strikes fear in the hearts of businessmen already inclined to think of the legal system as hostile and irrational. And not without reason. Cartoonists Thomas Rinks and Joseph Shields won a $42 million judgment from Taco Bell after a jury found that they, not an outside ad agency, were the source for the talking Chihuahua in the company's TV commercials. And Disney got socked with a $240 million judgment for stealing the idea of a sports camp complex next to its Orlando theme park from a firm that had approached it with the idea years before.

As it turns out, however, such judgments are rare and usually involve cases in which companies' files are chock full of evidence of meetings held and proposals exchanged. But like the scalding coffee cup at McDonald's and the obstetricians driven out of practice in Pennsylvania, these cases have now been enshrined in the Tort Reform Hall of Fame and etched into the imaginations of corporate general counsels everywhere.

General Foods, for example, once fended off a suit from an airline pilot who claimed he had sent in the idea of marketing Jell-O on the basis of its wiggliness. Turned out the company employed a woman whose job was to receive such ideas, date-stamp them and put them into a safe where nobody would ever see them.

And out in Hollywood, where Billy Wilder was successfully sued for making a movie ("Ace in the Hole") from a treatment dictated to his secretary over the phone by a would-be screenwriter, the standard practice has long been to return unopened any unsolicited screenplays and treatments.

A more enlightened approach is taken by Procter & Gamble, the world's leading consumer products company. On its corporate Web site, it encourages consumers to send in their ideas. But the boilerplate makes clear P&G will be free to "copy, disclose, distribute, incorporate and otherwise use" them without further obligation. For those seeking compensation, P&G insists on a patent or patent application before a conversation can begin.

Rather than go through that, however, I've decided to strike a blow for innovation, customer feedback and powder fantasies. I hereby offer my idea without charge to the first airline, bankrupt or not, that has the sense enough to ignore its attorneys and contact me at pearlsteins@washpost.com.

Steven Pearlstein will host a online discussion today at 11 a.m. at washingtonpost.com.


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