The book "Against Intellectual Monopoly" is highly recommended reading for the question of patents (and other intellectual property). The authors make a mostly empirical survey of the effects of intellectual property laws and of their absence in a wide range of industries, and conclude that their effect is a stifling rather than an encouragement of innovation. I think it's especially appropriate because, while my own opinion on the issue comes from moral reasoning (and it's generally frustrating to try to argue that side), this book presents a wealth of stories and statistics that are just plain interesting to anyone who cares about the issue.
(I could close with that bald assertion, but I won't.) Its basic thrust is that the patent system is "broken" to the extent that it does what it's designed to do: grant to an inventor a time-limited privilege to restrict his competitors so that he can earn monopoly profits that will reward him for his invention.
The book opens with the story of James Watt. Watt made a series of improvements to the design of a steam engine and obtained a patent, which he used to interfere with his competition. In particular, he used the legal system to crush Jonathan Hornblower and his superior engine design; the rest of his competitors had made further improvements, but simply waited for Watt's patent to expire (which had been extended to a 32-year period) before putting them into production. Watt himself was forced to use a technically inferior design element in his engines for some years to avoid infringing on someone else's patent. When Watt's patents finally expired and his competitors could freely enter the market, the number of steam engines being produced and the rate at which their efficiency improved both exploded; furthermore, Watt's company continued to increase production and make a profit for years despite the disappearance of the patent protection.
It seems clear that the overall effect of Watt's patent protection was to greatly slow down both the development and the wide-scale adoption of improved steam engines--and, as a footnote, that it may not even have been necessary to ensure that Watt made a profit. Note that Watt was using the patent system exactly as it had been intended. In the book, we see this happening over and over in detail and across a wide range of industries.
You think that if I were to write a song and post a recording of it on YouTube, then it would be perfectly acceptable for anyone, from the grandmother down the street to the ultra-mega business in the big city, to take my lyrics and melody and make mounds of money from it without compensating me in the least?
Absolutely. You got your compensation already when you learned about music from everyone else. And even if not, it's just morally wrong and nigh impossible to contain ideas.
How do you think the ultra-mega-corp is going to get unreasonably huge without monopoly control of creation or distribution though? And with tiny profit margins because their competitors can just copy them.
I also don't think you should get government help in keeping secret the method you use to do anything. It's possible to look at you and see what you're doing - if you do it where people can see you they'll just naturally be able to copy you. We'd have to lobotomize them or set up some ridiculous bureau of ideas to check everything for originality. Both nonsensical. A society can't afford to handicap its creators.
I've read that the possibility to patent genes led to the explosion of the field some years back. Are there such positive examples discussed in the book?
They led to an explosion of patents on genes, not to an explosion of applicable research. The research would have happened anyway, maybe a bit later or maybe not as patent directed.
It's the "maybe a bit later" part I wished I'd find better researched. I remember the source I found was pretty trustworthy, but still just one data point.
http://www.dklevine.com/papers/imbookfinalall.pdf