Taco Bell Learns $42MM Lesson That Idea Sources Can Haunt You

The New York Lawyer reports that Taco Bell was hit with a $41.9 million jury verdict for allegedly stealing the idea for the talking-Chihuahua advertising campaign. Thanks to Martin Schwimmer’s Trademark Blog for the pointer to this story.

The Taco Bell case illustrates a harsh fact of life for established companies: If you enter into discussions to use a smaller company’s ideas or concepts, you’d better be really, really careful if you subsequently decide to go it alone — you may find it very difficult to convince a jury that you (re-)developed the ideas or concepts on your own.

For another example of how juries can react in situations like this, see Celeritas Technologies vs. Rockwell International. In that case, Rockwell had engaged in preliminary discussions with Celeritas about some ideas for improving wireless modems that Celeritas’s technology guy had developed. Rockwell decided to go it alone, and Celeritas sued. At trial, the jury simply did not believe that Rockwell had independently created the technology after its discussions with Celeritas. Nor did the jury believe that Celeritas’s technology could not be a trade secret because it was already in the public domain (although the appeals court later held that Celeritas’s patent was invalid because of a prior published article that described similar technology). In all, Rockwell was hit with a damages verdict totalling over $58 million. (Disclosure: I was one of the members of Rockwell’s trial team.)