Vonage developed one of the first Internet telephone services and has attracted more than two million customers. But last year, Verizon — one of Vonage’s biggest competitors — sued for patent infringement and won a verdict in its favor in March.

The Gates memo predicted that a large company would “patent some obvious thing,” and that’s exactly what Verizon has done. Two of its patents cover the concept of translating phone numbers into Internet addresses. It is virtually impossible to create a consumer-friendly Internet telephone product without doing that. So if Verizon prevails on appeal, it will probably be able to drive Vonage out of business. Consumers will suffer from fewer choices and higher prices, and future competitors will be reluctant to enter markets dominated by patents.

But don’t software companies need patent protection? In fact, companies, especially those that are focused on innovation, don’t: software is already protected by copyright law, and there’s no reason any industry needs both types of protection. The rules of copyright are simpler and protection is available to everyone at very low cost. In contrast, the patent system is cumbersome and expensive. Applying for patents and conducting patent searches can cost tens of thousands of dollars. That is not a huge burden for large companies like Microsoft, but it can be a serious burden for the small start-up firms that produce some of the most important software innovations.

Yet, as the Vonage case demonstrates, participating in the patent system is not optional. Independent invention is not a defense to patent infringement, and large software companies now hold so many patents that it is almost impossible to create useful software without infringing some of them. Therefore, the only means of self-defense is the one Mr. Gates identified 16 years ago: stockpile patents to use as bargaining chips in litigation. Vonage didn’t do that, and it’s now paying a very high price.

Only patent lawyers benefit from this kind of arms race. And Microsoft’s own history contradicts Mr. Smith’s claim that patents are essential for technological breakthroughs: Microsoft produced lots of innovative software before it received its first software patent in 1988. As more and more lawsuits rock the industry, we should ask if software patents are stifling innovation. Bill Gates certainly thought so in 1991, even if he won’t admit it today.