It's crippling innovation before people even begin. I was chatting about encryption with some young chap, and I suggested a good way for him to learn about the practicalities of it would be to just sit down and code. He was astonished; he genuinely thought that the principles behind common encryption tools were in some way exclusive property of various companies and that he was legally forbidden from coding up his own implementation.

This is a true story and it's a belief that is on the streets right now; some people believe even mathematics is legally owned by someone and they can't use it. If people won't experiment, they can't innovate.

Note that the countries that don't give a damn about so-called IP happily copy everything they can get their hands on. It will not take them long to start innovating on top of what already exists.