If you've ever tried to read a patent, you'll know this system has failed. In almost no cases can you meaningfully replicate an invention from a patent. Quite apart from which, a huge number of things under patent protection today are public knowledge anyway, or can be considered 'obvious'.
Ive never been satisfied with this necessity; its not like innovation would just seize without patents: innovation in processes is still incentivized, because falling behind would mean higher prices than competition, and lost market share, so you still need to r&d to at least match the competition, let alone best it. Innovation in consumer products is still incentivized, by first movers effect, though perhaps the easiest copied things are lost (ie plastic lids might be too easy to copy design updates). Innovation in software obviously wont stop, and shenzhen succeeds in electronics with lax (absent?) patent/copyright law.
The primary innovation patents might be necessary for is a small company taking on a larger one, and needing to protect its design while it gets itself going.... but in practice, it proposed hinders innovation there more than it helps.
Patents, I think, are about essentially open-sourcing the design of things, and the incentive to do so is a temporary, gov-enforced monopoly. If theres any idea about innovation, its in the long-term, as 5,10,20 years from now, we can read up on these ideas and build on top of them, instead of seeing them lost in time with the company's demise.
However I never found that argument to be believable. Big companies have such a vast patents portfolio that it's impossible for small companies that try to create a product to not infringe on anything. So what happens many times in practice are actually cross-licensing deals.
Therefore small companies developing some innovative algorithm or technology are better off keeping it a trade secret until launch.