TechDirt has a summary of a post by Cog at The Abstract Factory about how software patents stifle innovation.  TechDirt's summary / commentary and the post itself, which isn't long, are well worth reading.  I'll leave a few select bits from the post:

His startup recently got sued for patent infringement by a company
that independently developed a product that performs a vaguely similar
function. This other company's product is much less sophisticated, and
their user-facing site is an ugly, user-hostile pile of crap. The term
"search arbitrage" would be a kind word to apply to this other
company's product. And there is absolutely no sense in which my
friend's work builds on any of this other company's technology.

Now, my friend and his partner have consulted multiple IP lawyers
and they've said, "Yep, the law is probably on your side." They have
also said, "You're still screwed." The trial would take forever, the
legal fees would be ruinous, and in the meantime nobody will invest in
a company which has a litigation cloud hanging over it.

So, this sucks for my friend and his partner. More importantly, this sucks for you,
because, having seen the product, I am 100% convinced that you, or
someone you know, would love to have this technology acquired and
integrated into a major site that you use.

Of course the point of the patent system was so that there was an incentive for patent holders to share their ideas in the knowledge that they would be able to profit from those ideas for a limited duration.  However, as Cog points out:

At any software company with competent legal counsel, developers are instructed in the strongest possible terms never, ever
to look at a patent, because the tiniest amount of documented influence
could be used as ammunition in a lawsuit.

As product cycles shorten and the length of patents increase (now at 20 years, but up from 17 years), the advantage of sharing the ideas behind the patent goes to 0 for everyone.

The Supreme Court may rein in some patents, thankfully.  The Swedish Pirate Party has a "constructive and reasoned proposal" for an alternative to pharmaceutical patents.  For me, I think we should just kill software patents and let the software industry borrow from the fashion industry and force software companies to innovate their way ahead of the competition.