Software patents are the devil. Let me get that out of the way.  My day job is writing commercial software so it's not just open-source people who don't like software patents.  Software patents are incredibly prone to abuse and are really only of use to companies with deep pockets to enforce their patent.

In 1995, Stardock considered getting a software patent.  It had come up with a way to embed web-based content into the desktop.  So users would be able to have pieces of their desktop wallpaper be displaying information and data from the Internet via web portals in the desktop itself.  This was 3 years before Active Desktop made its debut.  But as we started to go through the patent process, we realized that it would be incredibly expensive to enforce because the patent office itself was incredibly backward technologically. They didn't understand what we were trying to patent so enforcing the patent against violators would have been tricky.

Software patents can also have a chilling effect on innovation.  For example, imagine if Stardock had patented the technology behind WindowBlinds.  Windows XP would have had to license it from Stardock or fight Stardock's patent (ironically, Microsoft went ahead and patented their uxtheme implementation despite the fact that it's the same as what WindowBlinds does but we don't care as long as they don't try to enforce their patent). 

Not having software patents doesn't hurt intellectual property rights.  Patents are just one form of protection.  There is still copyright and there's trade secrets.  Admittedly, trade secrets are tougher in software because some companies will run people's software through a decompiler to see how it works and can make a copy of it that way. 

No system is perfect and in a world with "one-click purchase" patents and other such nonsense, I think we have to pick with lesser of two evils.