You only need to look at companies like Dyson who was just one guy in a garage coming up with crazy new approaches to an existing problem. Someone like that deserves some protection from bigger companies who could simply steal his idea and put him out of business.
That's the marketing by the pro-patent camp. However, it's the big guys that benefit, at the expense of the little guys. The big guys can afford the lawyers, the filing fees, and the patent war chests.
How often do we hear about the little guy receiving a patent infringement cease & desist letter by a patent troll or large company?
Patents add another layer of complexity to the market resulting unnecessary expense & process for everyone. We focus on hiring lawyers for protection & litigation instead of innovation. Derivative works result in innovation. In the end, the ultimate beneficiaries of patents are the patent attorneys & bureaucracy. Hardly a recipe for innovation.
The little guys are at an advantage over the big guys because they are more nimble & can explore markets that are "too small" for the big guys.
And then, why are we choosing to favor anybody at all? Why not let the free market determine the winner? Manufacturing, development, & marketing are becoming more decentralized as time moves on. Why have a centralized legal roadblock to new product development?
Some markets require large research investment up front (like pharmaceuticals) and they won't bother if others can immediately sell the same finished product without doing the research.
Without patents you also get trade secrets which can leave the public without ever knowing how something works.
Patents are an attempt to exchange a limited time monopoly for a complete disclosure of how the invention works so that the public can benefit. There might be an argument for that time being too long (and I think it's completely broken when it comes to software), but I can see why they're useful as incentives.
I agree with most of what you've said in this thread, but...
> Why have a centralized legal roadblock to new product development?
Rephrased: Why have a centralized catalog of discoveries and inventions available to the public that afford the contributors temporary exclusive license?
The idea behind patents was to counter very real problems created by the failure of markets to balance out the incentive to invent and innovate with the incentive to make those discoveries publicly available so they can inspire or cornerstone further discoveries. If they weren't published they were hoarded as trade secrets and were at risk of being lost forever over time.
Did the inception of patents account for or even acknowledge the kind of market control they're being used and traded for today? The lauded free market has turned patents into a commodity, possibly by expectation, but it's clear that this activity is relatively recent and seems to me due to changes in how the scope of their exclusive license grants is being interpreted/abused. Would we be better off assuming that the publication of discoveries would lead to closely aligned derivative products that would create a competitive environment or should we be generous with the licenses granted "inventors" so there's greater incentive to share those inventions?
Personally I think we're just seeing the beginning of what effects doing the later can have.