This current situation is unfortunate, but I think it's an imperfection of the market. If the patent owning company had been a bit less greedy, they could have made far more money with it.
Many software patents written today cover average work done by average engineers to solve average problems in a way that if you asked 100 engineers to solve said problem, the majority of them would could up with exactly the method in the patent.
Software patents are just a truncheon for incumbent companies to wield against other companies unlucky enough to try to enter the same space as patent-holding incumbent.
I think it was developed by MIT and not by E INK, is that right?
Because they can't begin to copy you until you've released your product to market, so you have profit potential for being the first mover.
This happens all the time as only a small percentage of the innovation that occurs actually gets patented.
In some cases it would be possible for a big company to take your innovation out from under you but if they can do a better job then we're all better off for that. If as an inventor you've only got one idea, you're screwed. You need to be able to innovate repeatedly.
But the concise way of responding to this is: markets already reward innovation. We do not need state controls on information to "stimulate innovation". The incentive exists as a natural effect of markets.
Also don't forget the disclosure part of patents. If you want something be protected by patents, you need to publish a description of how you do it. You can't just keep the engineers isolated on an island or whatever. A no patent world would make manufacturers build in even more measures to prevent reverse engineering, engineers sharing secrets, etc.