Fraunhofer got paid lots of money from big companies buying patent licenses. Since they are a non-profit institution dedicated to scientific research, almost everything they make finds its way back into funding scientific research.

That said, we shouldn't generalize Fraunhofer's economics to the rest of the software industry. If it was just this kind of thing I would have zero problems with it. But we should be suspicious of software patents because the patent system implicitly rewards ideas that are broad (more things a patent touches, more $$$) and non-inventive (less work to come up with a patent, more $$$). Patents can be dangerous to human progress, and the patent system encourages patents that are. A broad patent could hold a whole industry hostage for 20 years, which is an eternity in technology. I sympathize more with folks who want to get rid of the whole thing for this reason.

The licensing money have probably helped the Fraunhofer Society do more research. Now whether that is the way you think research should be founded, and whether the net cost to society has been larger than the gain is another question.

For context, Fraunhofer Society is a massive public-benefit organisation aimed at applied research: while it gets some public funding, that public funding is given according to how much they make in industry contracts, which are the primary source of income. The idea behind this model is that they have room to do work that's not immediately profitable, but on the other hand have to keep applications in mind and work effectively to still get industry work.

Money, of course. All kind of companies (including megacorps) paid for it.

Even some private individuals like me (I think the company was called Fluendo?)

It made them a lot of money.

Were they involved in the creation of MP3?

Karlheinz Brandenburg at Fraunhofer invented MP3. (And AAC.)

(edit: not Stockhausen, thank you!)

https://en.wikipedia.org/wiki/Karlheinz_Brandenburg

Karlheinz Brandenburg... Stockhausen was a composer.

Yes: https://en.wikipedia.org/wiki/Fraunhofer_Society#Notable_pro...

They developed MP3.

There's no real-life example of software patents being good.

Yes there are many, you just haven't seen any. Your perception is probably biased because you only get exposed to examples of bad patents cherry-picked by online media sources to drum up rage views. I've worked for a small company that got crushed by bigger incumbents but could only get a payout due to their software patents. However the much more common benefit of software patents are the countless startups and companies that got funded or had successful exits partially due to their patents. There are studies showing this sort of things. On mobile so can't find link, but see e.g. the work of professors like Robert P. Merges on ssrn.com.

I'm down on software patents too, but I'm not sure that's supportable without at least some sort of argument.

Given that the fundamental concept of software patents is bad, not only in principle but in practice, there's burden on anyone suggesting the good/bad question to validate that it's even a legitimate question. It's like the creationism/evolution "debate". I can simply say that there's no validity at all to the creationism arguments without providing any argument at all. Similar to the idea that I don't need to provide an argument to reject any other sort of baseless idea of false equivalence or unwarranted appeal to agnosticism.

If your premise is that "patents are not good" then why even ask the question about software patents?

It's rather disingenuous, the assumption with the structure of your question is "within the framework of 'patents can be good'".

Well, I indeed do not believe that patents are actually good, but there's far more merit to the unconvincing arguments that patents can be good than to any arguments that software patents can be good. There are good reasons that many people (particularly among those who understand software) fundamentally oppose the entire concept of software patents without opposing all patents.

"I'm obviously right, so there" is not an argument. If you want to convince a poor foolish Philistine like myself, you need to actually discuss your evidence and conclusions.