When I started my IT career with the then biggest Software firm in India in 1997, my salary was about US$ 1500/annum in India - yes there is no zero missing. It was Fifteen Hundred dollars per annum. It was a meager amount even by Indian (and in general 3rd world) standards. I had to scrape around for money for gasoline for my motorbike.
I worked with other firms, eventually got promoted to being overpaid when I decided to start a firm based purely on Free software (later branched to cover FOSS software). I started with US$ 300, a borrowed laptop and dial-up Internet access. Actually I could not look at starting a firm with proprietary technologies as the license costs were too steep - remember that we are in India.
I really believe in FOSS and think it is great for unlocking the productivity of 3rd world countries. I am convinced enough to bet my life (not to mention my savings, career and marital bliss) on starting a FOSS consultancy. We are doing pretty well and have also contributed back to the community. In spite of that, I am not convinced with the argument of abolishing patents altogether. The purpose of patents (and copyright) was to benefit the society and reward the inventor. The fact that the current patent law is being abused by large firms is a reason for modifying the law - not for abolishing it altogether. We have to ensure that the laws are changed to serve the original intent of fostering innovation to benefit society and rewarding the inventor.
Abolishing patent protection for software altogether will just enable established large organisations to further enhance their monopolies. The small firms where quite a bit of innovation happens will be left with no protection from large organisations which can absorb the innovation (for free) and then use their marketing/marketshare muscle to simply put the small firms out of business. Apart from people who write software for the love of it (and are good at it), small firms and individual inventors will not have much of a incentive to innovate.
Take the case of firms like mine with less than 20 people. If we had hit upon a innovative idea and decided to implement it as FOSS without patenting it, any large corporation can just re-implement it in their products and we will be left with no differentiating factor.
In fact, no matter how hard we try and provide value to our customers, the large corporations can just let us make all the mistakes and simply adopt all our successes. There will be no reason for a customer to choose our product/services over the established players. After all, the bigger players can demonstrate more stability and bigger support infrastructure. To top it all, the large players need not open their source code as they are not using my code - just my idea/concept which they have implemented in their proprietary product.
There is also no reason for the large players to 'play nice' with small firms.
In this scenario, our only hope for survival is if we can get some kind of legal protection. If indeed we are awarded a patent, the larger established players will be comp to license it from us and thus small firms like mine will be compensated.
If the large cos. are abusing this system to create barriers, then we have to look at preventing the abuse rather than abolish the system itself. Just because somebody is into credit card fraud does not mean we abolish credit cards altogether.
In India, there was a 10 year tax holiday for software firms (which ends in about a yr.). There were other firms like realty, manufacturing etc which registered themselves as software firms to benefit from this. The Government should look at tax fraud instead of abolishing the policy altogether - That would be a knee jerk reaction and simplistic.
The government is expected to provide a level playing field for all players. If the small firms do not have patent protection, it will be difficult indeed for small firms to be founded much less succeed unless as a result gross incompetence on behalf of the large firms.
I would recommend a more democratic solution to the software patent issue:
1. Let patents be granted only to individuals and small firms(Criteria - can be discussed).
2. Even in large firms, patents will be granted to individuals/small teams. The large firms should not be allowed to restrict independent licensing of these patents. They can at the most ask that they get exclusive access to these patents for 6 months from date of filing or to recover the cost of the patent.
3. Free patent organisation, Apache foundation, GNU can also patent stuff which can be leveraged to open up more source code.
4. GPLed (GPL v3, Affero GPL) software can be made exempt from patent prosecution if the software for the complete(and not just partial) product/service is GPLv3 or under Affero GPL. This exemption will serve the primary purpose of benefiting society (with patents being a vehicle to promote this).
This way, the society is benefited from innovation without the inventor being shortchanged.