Software patents considered really harmful
A) Almost no one in the industry comes up with innovative solutions to problems by reading software patents from the last 20 years. They do it by implementing their own solutions or improving existing solutions.
B) There is already a powerful force that has promoted innovation in software much more than patents, and that is open source. In fact, most of the web sites on the internet are powered by a stack of open source software. Therefore, innovation would take place in this industry even if the government didn't offer a 20 year monopoly to anyone who can disclose a non obvious idea to the public.
C) The purpose of patents is to promote innovation by encouraging the inventor to disclose the details of the intention to the public, in exchange for a 17-20 year monopoly on the implementation of the invention. However, since the industry moves so fast, inventions which are not obvious when patented become extremely obvious "incremental improvements" several years later. This combined with A completely defeats the positive side (to the public) of the compromise, but keeps the negative side of the compromise -- namely the monopoly. The latter costs society in the form of litigations, intimidation of small companies, and injunctions against useful products made by big corporations.
D) Software patents encourage patent trolls to file an invention and lie in wait, or sell the patent to someone who will lie in wait. Meanwhile, they discourage actually implementing technology, because it can infringe on any number of patented inventions. We all realize how much implementation and execution is more important than a mere idea. Thus, it might actually be thwarting the very thing that it's supposed to promote: actual implementation. In the words of Fred Wilson, it is a "tax on innovation".
E) By contrast, open source encourages actual IMPLEMENTORS of software to not only disclose the effect to the public, but release a functional piece of software which actually implements the innovations. Moreover, many Free Software licenses compel those who make use of this software to release their own software in turn. The result is people building on each other's work, promoting implementation and execution over simply disclosing ideas. This aligns much better with the interests of society at large -- and the original purpose for patents.
F) The industry moves too fast for the patent office to keep up not only with the state of the art (they have almost no chance), but even the state of PRIOR ART, leading to many patents being granted that don't satisfy the obviousness or prior art requirements. Sometimes dozens of patents are approved for the exact same thing. As a result, the cost to society is pushed into the legal sector, causing lengthy court proceedings rather than patent office actions.
G) When a small company is sued, even by a patent which can be invalidated, it can often be intimidated into entering a settlement (an unfair situation), or in fact defeated because it didn't have the funds to find the prior art. But even in cases where there was no prior art and the patented invention was in fact not obvious, chances are 99% of the time the "infringing" implementation was developed completely unaware of the patent's existence. See points A, and C. Therefore, the positive side of the compromise (to the public) was completely superfluous, but the negative side hits with full force and effect (see point F).
H) Large companies now spend billions of dollars to acquire patent portfolios for purposes of intimidation, defense against ... patent litigation, and anticompetitive practices -- by which I mean not competing on actual quality and price of the products, but rather trying to artificially reduce the quality and increase the price of the competing products. The costs to the consumer are obvious. Moreover, the costs to shareholders include money that will never be used for actual innovation, but simply the above purposes.
All in all, there are many reasons to abolish software patents in the USA.