Software patents are confusing. A patent is basically a trade between an inventor and the government. The inventor discloses to the government exactly how the invention works and if it is unique, the government grants the inventor a monopoly to manufacture, sell and export the invention for a number of years (usually 20). Patents are designed to promote innovation by allowing the inventor to offset the high cost of inventing something with a guaranteed number of years to recoup costs and return a reasonable profit. While this system has worked very well for many industries, it has proven problematic when applied to software.
The first and most basic problem is the notion of locking up an innovation for 20 years makes no sense in the software world. Software evolves too quickly to be tied down for 20 years making many patents useless. An example of this is the patent granted to Unisys for its LZW compression used in GIF graphic image files. The patent is still in force and though Unisys has granted royalty-free licenses to many groups, it did no good. Unisys was universally hated for enforcing the patent and the software industry moved on to a patent-free technology (PNG).
A second problem is that patent offices have a very inconsistent record in evaluating what software is patentable. A good example is the patent granted to Amazon.com regarding it's 1-click technology. This technology is so technically obvious that granting one company exclusivity is clearly unfair to its competitors and indeed to society at large. But the patent was successfully enforced against an Amazon competitor (Barnes and Noble). This success has given rise to a third problem - patent trolls.
Patent trolls are unscrupulous companies who seek out and acquire and/or enforce patents solely on the basis of potential value through litigation. A recent example is a company called NTP which sued Research In Motion (RIM) and Palm Inc. (among others) claiming that their patent on mobile email was being violated, despite systems that existed in the public domain before NTP received its patents. The result was a big payday for NTP and wasted money, time and reduced innovation from RIM. Just as in the Unisys case, the goal of promoting innovation was hurt by the patent - exactly the opposite of what was intended.
Another problem with patents is that they are not universally applied around the world. Each nation has its own set of laws regarding what can be patented and how long a patent will last. For example, the European Community doesn't not allow patents for software while the United States has very broad guidelines regarding what software can be patented.
While there's been much discussion on how to change the patent system to deal more fairly with software, little concrete action has come about in North America. Until changes are made, this jurisdiction will have to endure the extra hassle and inefficiency that comes from regulating obvious innovations.
References
An article from LawMart.com about the differences between copyright, trademark and a patent
Wikipedia Article on Software Patents
Wikipedia Article listing notable Software Patents
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