TERRY GROSS, HOST:
This is FRESH AIR. I'm Terry Gross. Siri, what is a patent?
MECHANICAL VOICE: Let me check that. I found this.
GROSS: The reason I spoke to Siri is she's involved in the story we're talking about today, and that issue is, you guessed it, patents. And some of those patents are about, you guessed it, Siri. Siri is, of course, that helpful lady who lives in iPhones and has an amazing ability to respond with answers to the questions she's asked.
The story behind her creation involves the larger story of how patents have become weapons in the wars between smartphone companies and the wars between startups and established high-tech companies. It's a surprisingly revealing story about innovation and the economy in the digital age.
My guest, Charles Duhigg, is a New York Times reporter who recently wrote about the patent wars in the article "The Patent Used as a Sword," co-written with Steve Lohr. Duhigg is a reporter for the Times who is contributing to their current series on the iEconomy. He's also the author of the bestseller "The Power of Habit: Why We Do What We Do in Life and Business."
Charles Duhigg, welcome back to FRESH AIR. So this article about patents that I want to talk with you about, it's part of a larger series you've been contributing to in the New York Times on the iEconomy. Why are you writing about the iEconomy? What is it? What is notable about this change?
CHARLES DUHIGG: Starting last year, we decided that we really wanted to look at what was going on inside the American economy and the worldwide economy right now. We were at this inflection point where employment was down, we were a couple years after the financial crisis, and yet even though there were a lot of people out of work, a lot of people suffering, in a lot of ways it looked like the economy was actually very strong.
There were all these tech companies that were doing fantastically well. There were parts of the economy that seemed to be growing and creating wealth in ways that hadn't happened for years or decades, almost since the age of the robber barons.
And we were trying to understand how to make sense of this, the fact that there are some people who can graduate from college, they go and they start the right company, and they get bought for a billion dollars within a couple of years, and thousands and thousands of other people who don't have any jobs, who can't find work even though they're willing to work, they're well-trained, they literally can't find the jobs to absorb them.
And we decided to focus in part on Apple, because Apple is not only the most valuable company in the world right now, but it's also kind of this iconic company. I think it's widely acknowledged as the most innovative, one of the best companies, kind of the forefront of bringing us to tomorrow.
And so by focusing on Apple and the tech industry, we really wanted to ask this question: What has happened to the economy? And what we found is it's been a slow process, but the transition from an industrial to a digital economy is as transformative, as significant, not only for the economy but for people's lives, how people do work and how people should think about their own work, as the transition was from an agrarian economy to an industrial economy 100 years ago.
GROSS: And what you're finding is some of our laws and ways of doing business are really out of date, even though those laws haven't changed, which leads us to patents. And I want to mention an astounding figure or two here. This is according to a Stanford University analysis that you quote. In the smartphone industry in the past couple of years, as much as $20 billion was spent on patent litigation and patent purchases.
That's the equivalent of eight Mars Rover missions. Last year for the first time, spending by Apple and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products.
So you have an amazing amount of money here in buying patents and lawsuits. What's going on with patents, and how are patents being used to wage war at this point in the digital world?
DUHIGG: Let's talk about what a patent is in the first place. Patents are actually written into the Constitution. There was this basic idea that if you gave people ownership of intellectual property, a new innovation, then two things would happen. First of all, you would incentivize people to invent new things because they would say, oh, if I can own this technology for up to 20 years, then it's worth the capital that it takes to invent it in the first place.
And second of all, it would encourage people to share how the invention works. If they don't have to worry about it being stolen by someone else, they'll explain to the world this is what I invented, and other people can use that insight to develop their own inventions.
So the idea was to encourage innovation, but what's happened, particularly in the last 15 years and in software in particular, in technology, is that rather than patents becoming something that encourages innovation, patents have become essentially a barrier, a toll gate on the road of innovation because patents have become so broad, so amorphous that if someone can get a patent on kind of a completely commonplace technology, what they can do is they can say to everyone else: Listen, if you want to invent this widget that you've invented on your own, that hundreds of people have invented at this point, I own the intellectual property on that widget. So I can stop you from using or selling that widget, or I can force you to pay me for it.
And there's so many patents now, this huge explosion in patents, in software, in business processes and technology, that large companies have built up these huge, huge treasure chests of them, and they can use those to sue each other and prevent them from selling competing products, for instance a competitor to the iPhone.
GROSS: Yeah, why is the smartphone industry such a powerful example of this new use of patents to wage war?
DUHIGG: For two reasons, the first of which is that smartphone industry creates so much wealth right now, and so we're seeing the world transformed to a place where almost everyone, at least everyone in the first world, carries a computer on their body, and there's intense competition to be the people who sell you that computer or make money off that computer.
But the second part of it is that the rise of smartphones was mirrored by the rise in the understanding by technology companies that they can patent almost anything, and their aggressive moves into pushing the patent office into granting them patents on almost any idea they could come up with.
GROSS: So let's use the example of Siri, which you use in your article, and Siri is the - Siri is the name for the woman's voice that you hear in the voice-recognition system that the Apple iPhone introduced last year. When that was introduced, somebody by the name of Michael Phillips was one of the big losers. He was also one of the people who invented some of the software that's used in Siri.
So what did he invent, and why was he a loser and not a winner?
DUHIGG: So Michael Phillips had studied at Carnegie Mellon, MIT. He had spent his whole life working on voice-recognition technology. And he had started a company named Vlingo, and in fact Vlingo created software that at one point was integrated into Siri itself. It was part of how Siri worked, because Siri is essentially a stack of different software programs on top of each other.
But a couple years after starting Vlingo, he gets a call from a guy name Paul Ricci(ph), who runs another voice-recognition company, a much larger voice-recognition company, named Nuance. And Mr. Ricci calls Mr. Phillips and his partner into his office and he says: I have patents that can prevent you from working in this industry.
No matter how good the technology you've created is, I have patents that if I take you to court, can put you out of business. So here's your choice: You can either sell your company to me, or I'll sue you. Well, Mr. Phillips is - he's not a guy who - he's a big guy. He doesn't like to get bullied.
DUHIGG: So he and his partner push back, and they say we're not going to sell you our company, we're going to - we think that we have a good product. We think we should compete in the marketplace. If Nuance is a better product, then people will choose you, but we think they're going to choose us.
And Nuance, Mr. Ricci, files the first of six lawsuits alleging patent violations. They end up going to court on one of these. It costs Mr. Phillips $3 million to do the legal work that's necessary to get ready for the courtroom battle. And when they go to court, Mr. Phillips actually wins. The jury ends up saying Mr. Phillips didn't violate Mr. Ricci's patent, Mr. Phillips is fine.
But for a startup to spend $3 million simply defending itself in a patent lawsuit is devastating, and they had five more lawsuits to go. And the concern with patent lawsuits is always that you're in front of a jury. These aren't scientists. They're not people who know that much about technology. You never have any idea how a jury's going to rule.
And if one of those juries was to rule against Mr. Phillips, their company would be worthless. So after winning the first lawsuit, after spending all this time, $3 million, he decides to just throw in the towel, and they sell their company to Mr. Ricci.
GROSS: And what does that mean for Phillips? Did he make a lot of money? Was that a good thing for him?
DUHIGG: It was an OK thing. He made some money off of it. But for Mr. Phillips it was disappointing because he wanted to be an entrepreneur. He loves creating voice-recognition technology. He wanted to start this company and grow this company.
But the real loser here are consumers, because consumers really benefit when there's dozens or hundreds of companies all competing against each other to create the best product at the lowest cost. Monopolies are bad for consumers, and yet when one company can come in and say I'm going to basically bully everyone else into selling to me because otherwise I'm going to take you to court on patent claims, they create a de facto monopoly.
They create this opportunity to basically say I'm going to shut down innovation as it's supposed to happen in the marketplace. You know, Mr. Phillips was working on this incredible technology that would basically be able to recognize human emotion in spoken speech when you speak to a computer, and he had to abandon all of that research so that he could spend all of his time and money preparing for this court battle.
GROSS: My guest is New York Times reporter Charles Duhigg. His article "The Patent Used as a Sword" was published this week. We'll talk more after a break. This is FRESH AIR.
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GROSS: My guest is New York Times reporter Charles Duhigg. We're talking about the article he co-wrote this week about how the patent has become a weapon in the wars between high-tech companies, especially smartphone companies.
Critics say that the patent system is really designed for the mechanical age and not the digital age. What's the difference in terms of what's being patented and how that is - how those patents are being used to protect or to attack?
DUHIGG: Here's a great example: One of the earliest patents is for the cotton gin. The cotton gin was a major innovation. It speeds up removing the seeds from cotton significantly. And when that patent is filed, there's actually a drawing of what the gin looks like.
It's a machine with a crank on it, and the patent explains that, you know, there's spikes that move through and pick out the seeds. So that's an example of a mechanical patent that it's very clear what's being patented.
At the other end of the spectrum, there's patents, like for instance the patent for Amazon's One-Click. Amazon owns a patent that says if I come to your website and I press a button to buy something, and I don't have to press another button, Amazon owns that.
Now, there's no explanation in the patent application as to exactly what's going on behind the scenes. Instead what they're patenting is a business method. They're saying we came up with this concept that you press one button and you don't have to press a second button to say complete my purchase, and you'll have bought the thing.
Once Amazon has that patent, it's this hugely broad patent, and they can basically go to anyone else on Earth who might want to put on their website or put on their machine or anything else something with just one button to say I buy this now, and say you can't do that. We own the patent on that.
Or the Siri patent that you mentioned, and this is actually a patent that Apple owns - it doesn't actually have anything to do with Siri, but it's now seen as a lynchpin in protecting Siri. Apple in 2004 applied for a patent that basically said we want to create one interface to search across multiple databases.
So at that point, as you'll remember, Google had a search engine that would let you search the Web. And what Apple said is in this patent - and this is before the iPhone, this is before Siri - we're going to create one box that you can type in a term like Terry Gross, and we're going to search the Internet and the contacts on your computer at the same time.
They didn't explain how this searching would happen, they didn't explain how the software would work, they just explained what the outcome would be. They won that patent last year. It was finally granted to them after being denied nine different times. On the 10th application they got it.
And as a result, they're in a position where they can credibly claim that they own any kind of search engine on Earth that searches more than one database at once. That's...
GROSS: But wait a minute, had they not even invented the way of doing it yet, they just invented the concept?
DUHIGG: They just invented the concept, and that's almost always true now. Companies come up with a concept, and they file the patent for the concept before they actually figure out and make the concept into a product, because it's a race to the patent office. It's a race to try and get your patent in there first.
The difference with the cotton gin is, Eli Whitney didn't say I'm patenting every way to ever remove a seed from cotton. Instead what he said is, I'm patenting this machine, and you really can't do that many variations on this machine.
Today you can say I'm patenting essentially a concept. I'm patenting essentially an abstract idea, and as long as I say it can happen on a computer, I own every application of that idea going forward for the next 20 years.
So if someone comes up with some application that you've never dreamed of, if someone comes up with - dreams up, for instance, Siri, a voice-recognition digital assistant, even if you never thought of that when you were writing the patent application, you now can claim ownership over it.
GROSS: So is this happening now, where somebody invents a way of doing something, like an application for devices, and they find out that they can't do it because the concept has already been patented? The application didn't exist, the way of doing it didn't exist, but just the concept had been patented, and therefore this person can't move forward with their application?
DUHIGG: Absolutely, that literally happens every single day. If you are now a startup in the digital space, as soon as your product becomes even moderately successful, you will get sued by someone who holds a patent on a concept that they say that you're violating.
The examples range from almost anything. Facebook has been hit by numerous patent lawsuits, and these are patents that were filed 10, 15 years ago, before anyone had ever really thought of a social network. And yet there are concepts that were patented that they now say people are violating that patent.
There's a company that's actually suing almost every major app manufacturer, like the companies that make apps that you buy for the iPhone, because they say that they got a patent on the concept of paying for something digitally, transmitting digital dollars over the Internet, a patent they got over a decade ago.
And they say that every single app violates that because you have to pay for an app somehow, and you don't hand them cash, you hand them a digital dollar. It almost goes without saying that when you are a startup, one of the first things that you do, you start setting aside money to defend yourself from patent lawsuits because any successful company, even moderately successful, is going to get hit by a patent lawsuit from someone who's just trying to look for a payout.
And as a result, there's a whole bunch of things that entrepreneurs just don't go into now. Smartphones is a great example, right? There's so many patent lawsuits in the smartphone arena that essentially entrepreneurs do not try and create new type of smartphone technologies now because they know it's pointless. They're going to get sued almost immediately.
GROSS: I don't know how many times I've said this on the show, but I just find it so interesting that so many of these big companies that started as little startups, college students working in their dorm rooms, are now these like huge competitive companies that are suing each other and becoming so possessive and - I don't know, would greedy be the word?
DUHIGG: I think it depends on where you're sitting. And you're exactly right. In fact, Bill Gates, actually a couple years ago, said if he was trying to start Microsoft today, there's no way he could have done it. No computer company could have started in an atmosphere like the one we have today, where essentially every basic technology is already patented, and there's people just waiting to sue you as soon as you come up with a successful product.
But here's the other perspective on that, sort of the question of is it greedy. There's patent trolls, these companies that exist purely to sue other people. That is obvious greed, right? It might be legal greed, and it might be virtuous greed, but they're not really bringing anything into the world except for lawsuits.
But then there's companies like Apple and Microsoft, and let me tell you the argument that Apple makes. Apple has obviously famously sued Samsung recently for patent violations. Apple owns a number of these broad patents, and they're trying to use them in court battles to keep competitors, most notably Google, from mounting market challenges to the iPhone, and the iPhone is the most profitable product for Apple.
Apple says we spend millions and millions of dollars creating innovations, and it's not just the dollars, it's people's lives. They dedicate their lives to coming up with something like slide to unlock, the iPhone, this kind of cool shape that it has.
We introduce these amazing technologies into the world. We are a research and development engine for essentially the most innovative things out there, and we deserve to be compensated for that. You might call it greed, or you might call it just good sense. But the law exists to compensate us for doing that hard work.
GROSS: Well, I don't think anyone could argue with the fact that Apple has come up with brilliant designs that have changed the world and that all the other companies have tried to imitate in whatever way they legally can get away with. But on the other hand, you describe Apple basically asking its engineers to have brainstorming sessions in which they come up with ideas that can be patented just so that they can have a patent, whether they go through with developing the idea or not.
DUHIGG: That's exactly right. Apple, like every other major tech company, in addition to creating great products, has also become - sort of as a side business - an engine for generating as many patents as humanly possible. And a lot of those patents are never going to turn into products. A lot of those patents are for ideas or concepts that might be totally impractical, but they want to get as many patents as possible, build up that treasure chest.
Now, there's a counterpoint, which comes from a lot of people like, for instance, Judge Richard Posner, who's a very well-respected federal appellate judge, or a paper that was recently published by the - a working paper from the St. Louis Federal Reserve, that says we don't believe that patents are necessary.
We think that Apple, if they create, invent the iPhone, and they sell it, they're going to make so much money on that even if other people can try and copy and imitate them, Apple will be well-compensated for all of its research and development.
Now, Apple makes about a billion dollars a week on iPhone sales, maybe even more now that the iPhone 5 is out, we don't know the latest numbers. And what Richard Posner would say is, look, if you're making a billion dollars a week, you have earned back the cost of inventing the iPhone many times over.
And it's not just the idea that gives you a market advantage, it's the fact that you know how to build the thing so well, that your competitors are on this, you know, catch-up curve that's going to put them behind, and they're going to have to go find suppliers. You don't need a patent in order to get rich off the iPhone.
And that's the counterpoint to this, because ultimately the patent law doesn't exist to be just to a company; the patent law should exist to be just to society, to do what is best for consumers and maximize innovation.
GROSS: Charles Duhigg will be back in the second half of the show. He's a reporter for the New York Times. He co-wrote the article "The Patent Used As a Sword," which was published earlier this week. I'm Terry Gross and this is FRESH AIR.
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GROSS: This is FRESH AIR. I'm Terry Gross back with New York Times reporter Charles Duhigg. We've been discussing his recent article about how patents have become weapons in the wars between high-tech companies and the wars between startups and established companies. That article was part of the Times iEconomy series. Duhigg has also covered working conditions at Apple's Chinese factory, Foxconn. He is the author of the bestseller "The Power of Habit," about how habits are formed and broken.
So the Federal Trade Commission is investigating Google now, including how it licenses patents and sues other companies it claims are infringing on those patents. Can you tell us a little bit about this investigation?
DUHIGG: Yeah. So there's two class of patents out there. There's the normal patent that we all think about. And then there something called the standard-essential patent. And what happens with the standard-essential patent is that ever so often all of the tech companies will essentially sit down together with their representatives and they'll agree that some type of invention is standards essential. Because they want things to interrupt(ph) - so they'll say OK, look, from now on we're all using this particular type of wireless, or from now on we're all using USB technology. Now, the company that owns the patent on that particular brand of wireless or on USB, that company is suddenly pretty lucky, right? Because everyone has agreed to use their technologies, so they all have to pay licensing fees. But in exchange, they say to that company that owns that patent, you now have to promise to license this patent to anyone who asks you to for a fair and reasonable rate. You can't gouge anyone. You can't exclude any competitors. You've got to give a license to anyone who asks for it. This is enshrined in law. It's called standard-essential patents and there's special rules around standard-essential patents.
What the FTC is investigating, as well as European regulators, is whether some companies - for instance, Google - have been abusing standard-essential patents. And Apple claims that this happens all the time - that companies that own a standard-essential patent either will essentially refuse to license it to a competitor or will ask for a fee that's so high as to basically make it hard for competitors to compete. Now, what's going on right here is a battle between Apple and Google. Google manufactures Android, which is now the most common smartphone operating system in the world. Apple obviously owns and manufactures the iPhone, which is the second most common smartphone operating system in the world. And what Apple claims and the FTC is investigating is that Google is preventing Apple from licensing standard-essential patents so as to try and make it harder for Apple to compete within the smartphone marketplace.
GROSS: A standard-essentials patent was compared in a New York Times article to, say, railroad bridges in the 19th century.
DUHIGG: Absolutely. Right. What happened was, you know, as you're building railroads all across the nation, you have to, everyone has to agree on a certain size of gauge, right, a certain size of track, because you can't change the wheels on the train when you cross from Missouri into some other state. And so everyone agrees and they sit down and they say, OK, no matter who owns the trains, no matter who owns the tracks, we're all going to use the same size, the same width of track. It's to create interoperability. Now, what's really interesting about this is that interoperability is really important for the world, right, it's a really good thing. I mean when you think about it, all the shirts that you own are interoperable with your pants. You never have to like buy a special set of pants in order to be able to tuck in your special set of shirts.
Interoperability usually happens on its own in most industries because it's what consumers want. But in industries that are very technical and industries that are very new, where the consumer doesn't have very much power, companies will try and delay interoperability to trap you into their particular product. So if Apple can sell you an iPhone and it doesn't interact with any of your computers, except for your Macintosh, then if you love your iPhone you have to go buy a Mac. So what happens is that the industry comes in and they say there are certain interoperability rules that we want to create and standard-essential patents will essentially make that interoperability occur. And that battle right now is over who should have control, how much control should an inventor have over an invention that has been determined to be the standard that everyone has to use.
GROSS: So in talking about patents, Google bought Motorola. Motorola was already in the cell phone business. Google is in the cell phone business now. Did Google buy Motorola with the idea of buying Motorola's patents?
DUHIGG: Absolutely. Absolutely. In fact, they were explicit at the time. Google is a relatively young company compared to Apple and these other firms and they had a very shallow patent portfolio. And now that they're moving into creating software for smartphones, they needed a war chest of patents. So when they went and they bought Motorola Mobility, they at the time basically admitted we're not buying it for the company, we don't even care about the company. If it's up to us, we might even just kill the company. We just want this big treasure chest of patents so that we can defend ourselves in patent wars.
GROSS: And how have they use those patents?
DUHIGG: They've used those patents to essentially try and force Apple into negotiations. It's interesting that Apple has not sued Google at this point, right? The battle is between Apple and Google. And Apple has sued Motorola. Apple has sued HTC, Nokia. They've sued these companies that are Motorola partners. And Motorola just recently sued Apple and then withdrew the case in what's widely seen as kind of a peace gesture. Basically, Google wanted to sit down and negotiate a peace with Apple and they knew that the only way that they could sit down on the table as equals was to have this huge treasure trove of patents. Patent wars usually are only concluded when everyone agrees that it's mutually assured destruction. And to achieve mutually assured destruction, everyone has to have a whole bunch of nuclear weapons at their back.
GROSS: So let's just pull back a second. There have been a lot of criticisms of how patents - patent laws functioning in the digital era. There's also proposals for reform. What are some of the more interesting proposals for reform?
DUHIGG: Well, one of the most interesting is to basically create different types, different classes of patents. So there are some areas in which it's widely agreed patents are needed. Pharmaceuticals is the best example because it can cost billions and billions of dollars to come up with a new drug formula. And then as soon as you come up with it, it can cost one or two cents to make that pill. So pharmaceutical manufacturers say I'm never going to spend any time spending the billions inventing a new drug if everyone can copy it as soon as I figure it out. So they need patents of, say, 20 years to say I can recoup the cost of development. But for software, and Judge Posner raised this possibility, maybe patents should only be five years long instead of 20 years long. Maybe they should only be three years long. Maybe there should be some types of patents that are very firm protections and other patents where it's kind of a weak protection. The benefit of the doubt goes to the other party that they didn't violate it. Another...
GROSS: What would be the logic of short term patents for certain digital innovations?
DUHIGG: Well, the logic would be that basically, exactly what we were talking about before, that oftentimes someone will patent a concept and then seven years later someone comes up with an invention that uses that concept in a way that the original patent holder never dreamed of. And then they get, and it becomes huge and they get hit by this lawsuit. If the duration was shorter it would basically say, look, if you come up with a concept, you need to execute on it very quickly to benefit from it. And anyone who executes on it down the road doesn't have to worry about a patent claim. That essentially the digital marketplace moves so quickly that the patent system should also move very quickly.
But there's other ideas out there as well. One idea is for companies to band together and to create these pools of patents that can be only used for defensive purposes. So basically to say, look, if you promise to take your war chest of patents and contribute it into this common pool, it will be a defense. Any time you get sued you can say, no, your suit doesn't hold up because I've got my own patent in this pool that I've licensed that gives me the right to do what I want to do. But that you get kicked out of that pool if you ever file an offensive suit against anyone else. So it's essentially saying as long as everyone is a pacifist, we're all going to protect each other, but once you become an aggressor, you're on your own and everyone is going to turn around and attack you.
GROSS: So the people who actually decide what is worthy of a patent are the people in the patent office. And you write a little bit about some of the problems that the patent office is besieged by now. What are some of those problems?
DUHIGG: The biggest issue that the patent office has is twofold. Number one, they hire a lot of young people who are relatively inexperienced and as soon as they get experience, they're pretty smart, they leave, because they can make a lot more money in private industry filing patents for companies. Second of all, the law is relatively unclear. There's been this big back-and-forth on whether software should be patented or business methods should be patented, and as a result, the patent office just kind of threw up its hands and said, OK, we'll patent most stuff. Seventy percent of patents that are filed again and again end up getting turned into actual patents. So they threw up their hands and they said, OK, we'll patent most stuff and we'll just let the courts decide what's right and wrong.
GROSS: In describing the patent office, you also write that the people in the office who make the decisions about whether something is worthy of a patent or not often have to make those decisions in a really short amount of time - maybe even 24 hours. But the repercussions of that decision are going to last for a really long time and have a really big effect. Why is there so much pressure to make the decision so quickly?
DUHIGG: It's not so much to make the decision quickly, because it usually takes about two years to actually issue the first decision. It's that they spend 20 - they only spend about 20 or 22 hours over those two years actually thinking and researching this particular patent. And the reason why is because there's so many more patents now. The number of patents that are filed every day has increased enormously over the last decade. So you have a patent office that's essentially getting besieged by a flood of applications. And you have these patent officers who oftentimes don't know the technologies very well that they're actually investigating. And they get an application for something, some type of technology that they're kind of familiar with it, they have 22 hours on average to go through all the literature, to search through thousands of documents to see if this is really new and novel and something that is patentable. And they're just so overwhelmed that they essentially at some point throw up their hands and say, OK, it's a patent. I've got a lawyer on the other side who is badgering me to death. I've made them re-file this thing five or six times. OK. You clear the bar. It's a patent. Now leave me alone.
GROSS: Were you surprised to find that patents are actually an interesting window into what's going on in the digital world in terms of innovation, of squelching innovation, and just like business in general?
DUHIGG: Yeah. It is. It's really interesting. And I think, you know, the thing that's interesting about patents, I think patents are inherently kind of boring for most people, right?
GROSS: Yes. Right.
DUHIGG: Nobody ever goes home and says, honey, let me tell you about what I learned about patents today. But here's what's interesting about it. The thing about a patent is a patent is an incentive. It's an incentive to encourage people to innovate. And the way the patent system works right now, it's a very specific set of incentives. So if someone's graduating from college and they're thinking of going into designing smartphones, they're not going to do it because the incentives are set up to say everyone already owns all the patents on smartphones. Instead what you should do is you should invent games for smartphones. And games maybe are less socially meaningful than inventing the smartphone itself. But the reason why we should care about this is because this incentive is across everything. It determines whether people become biomedical inventors or investment bankers. Patents are an example of the set of incentives and the entire digital economy is a set of incentives that are encouraging people to go down one path or another. And I think there's a lot of people who right now are worried that people are going down frivolous paths - like inventing new social networks or new games instead of inventing the cures for cancer or fundamental technologies that will change the world.
GROSS: Well, Charles Duhigg, I want to thank you so much for talking with us.
DUHIGG: Thank you. I really appreciate it.
GROSS: Charles Duhigg is a New York Times reporter. The article we've been discussing, "The Patent Used as a Sword," was published earlier this week in the Times. You'll find a link to it on our website, FRESHAIR.npr.org. Transcript provided by NPR, Copyright NPR.
New York Times business reporter Charles Duhigg says that consumers and innovation are the big losers in the patent wars. "Patents have become a toll gate on the road of innovation," he says.
Charles Duhigg is currently working on a series about Apple called "The iEconomy" for The New York Times. His book about the science of habit formation, The Power of Habit: Why We Do What We Do in Life and Business, was published in February.
Elizabeth Alter / Random House
In August, Apple was awarded more than $1 billion in a court victory over Samsung in an epic patent battle between the two biggest smartphone makers.
Damien Meyer / AFP/Getty Images
If you don't think of patents as a particularly exciting or interesting field, consider a point Charles Duhigg makes in his recent New York Times article, "The Patent, Used as a Sword": According to an analysis done at Stanford: "In the smartphone industry alone ... as much as $20 billion was spent on patent litigation and patent purchases in the last two years — an amount equal to eight Mars rover missions."
These widespread patent lawsuits are discouraging entrepreneurs, Duhigg tells Fresh Air's Terry Gross. "Entrepreneurs do not try and create new types of smartphone technologies now because they know it's pointless: They're going to get sued almost immediately."
The rise in patent lawsuits is due, in part, to the growth of smartphones themselves. As smartphones became nearly ubiquitous, technology companies became more aware they could patent almost anything. Duhigg describes "aggressive moves" that companies use to force the patent office into granting patents "on almost any idea they can come up with."
In the race to the patent office, companies will file the patent for a concept before they actually figure out how to turn the concept into a product. Duhigg says the big losers in this patent race are the consumers and innovation itself. "Patents are being used to wage war in the digital world," he says, "and as a result, patents have become a toll gate on the road of innovation."
On Apple's Siri patent
"This is actually a patent that Apple owns, and it's referred to as the Siri patent because it doesn't actually have anything to do with Siri, but it's now seen as a linchpin in protecting Siri. Apple, in 2004, applied for a patent that basically said: We want to create one interface to search across multiple databases. So at that point, as you'll remember, Google had a search engine that would let you search the Web. And what Apple said is: In this patent — and this was before the iPhone, this is before Siri — we're going to create one box that you can type in a term like 'Terry Gross,' and we're going to search the Internet and the contacts on your computer at the same time.
"They didn't explain how this searching would happen, they didn't explain how the software would work, they just explained what the outcome would be. They won that patent last year. It was finally granted to them after being denied nine different times. ... And as a result, they're in a position where they can credibly claim that they own any kind of search engine on Earth that searches more than one database at once."
On patent lawsuits coming out of the woodwork
"Facebook has been hit by numerous patent lawsuits — and these are patents that were filed 10, 15 years ago before anyone had ever really thought of a social network. And yet there are concepts that were patented that they now say people are violating that patent. There is a company that's actually suing almost every app manufacturer — like the companies that make apps that you buy for the iPhone — because they say they got a patent on the concept of paying for something digitally, transmitting digital dollars over the Internet, a patent that they got over a decade ago, and they say that every single app violates that because you have to pay for an app somehow, and you don't hand them cash, you hand them a digital dollar.
"It almost goes without saying that when you are a startup, one of the first things you do is you start setting aside money to defend yourself from patent lawsuits, because any successful company, even moderately successful, is going to get hit by a patent lawsuit from someone who's just trying to look for a payout."
On the incentives of patents
"Patents are an example of the set of incentives — and the entire digital economy is a set of incentives that encourage people to go down one path or another. I think there's a lot of people who right now are worried that people are going down frivolous paths, like inventing new social networks or new games, instead of inventing the cures for cancer or fundamental technologies that will change the world."