I came across this blog post which supports software patents. I wanted to add a comment, but comments are restricted to 1000 characters on that blog and so it'll have to be a trackback.
Patents - as envisioned by our founding fathers - was and is about rewarding and fostering innovation.
Absolutely. Whether software patents should be allowed or not depends entirely on this test.
First, why should software be different from other subject matter that is patentable? For example, pharmaceuticals and tangible items such as computers, appliances, etc? Is software, by its nature, not entitled to the same benefits of patent law?
You ask this as a rhetorical question, anticipating the answer No, but this is in fact the core of the anti-software-patent case. There are two things which make software different from tangible items.
The first is that if I give you a copy of my software, I still have it for myself. This is not true of anything tangible, and this fact alone makes the economics of software vastly different from the economics of cars or pharmaceutical pills. Therefore, I don't think it's valid to say "we have patents for appliances, so we must have them for software". Fresh analysis, and going back to the reasons for the existence of patents, is necessary.
The second is that software is vastly more complex than almost anything else man makes. A car may have 10,000 parts. A software project may have 10,000,000 lines of code. This means that it contains vastly more ideas and components, and is therefore far more likely to hit patents. It's therefore much easier for one company with a patent on a core software idea to put an innovation toll-booth up.
With software patents in place, over the past decade, I have seen great advances made in technology.
It may interest you to know that Bill Gates, owner of the company which makes the "example of innovation" that you cite, has a different view. In an internal memo, he said:
If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today. ... The solution is patenting as much as we can. A future startup with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high. Established companies have an interest in excluding future competitors.
Lastly, not everything is a liberal/conservative issue, as you imply with your dig at "liberal Europe". I am politically conservative (with a small c, for UK readers), but I believe that patents on software damage, rather than promote innovation and so, by the test that you yourself give, should not be permitted.
Using some possibly plausible statistics, I've done a spreadsheet (OpenOffice Calc format) showing what percentage of the world Internet population we currently cover with Firefox localisations, and what percentage we'll get when all the localisations listed here (i.e. the ones in mozilla.org CVS) are finished.
Headline numbers: we are currently at 88.3%, and we will get to 92.6% when we've finished Spanish (Spain), Dutch, Turkish and Slovak.
The missing big ones are (in order) Malay, Arabic, Thai, Vietnamese, Hindi and Farsi. We don't seem to have as much impact in the far east... Getting all those would take us to 98.6%.
The middle four have at least had Firefox builds done before (see bottom of page), but the last Malay build of a mozilla.org product was Mozilla 1.0.1, and we've never had anything in Farsi. If you or anyone you know is interested in doing one of these languages, please contact the Mozilla Localisation Project staff.
I know Arabic, Thai, Hindi and Farsi are particularly complicated scripts - does anyone know if we fully support them yet?
While I can't condone website defacement, this is very funny. Here's a screenshot for when they fix it:

No doubt they'll spin this into a press release claiming that they are being unjustly attacked by the anarchic, crypt-communist, copyright-hating free software community. <sigh>
OK, I'm back, and ploughing (sic; UK spelling) through the backlog of email. For your interest, I had 3036 gerv@mozilla.org messages (2007 spam, 1029 wanted), and 4715 gerv@gerv.net messages (4465 spam, 250 wanted) waiting for me. Normal service will be resumed... eventually ;-)
Congratulations to everyone involved in hitting the target date for the Firefox release, and who contributed to a fine piece of software. I'm also looking forward to Thunderbird 1.0, currently scheduled for the second week in December.