Without patents, there's little incentive to innovate unless you can throw enough money at a startup to get dominant market share before someone else copies you.
I don't believe this matches what we know of history. It also doesn't match personal experience -- I've worked on open source projects because they're fun, and on trying to grow better ETL tools because they make the rest of my job easier.
It probably does change who does the innovating, tho. Patents mean that instead of people innovating things to make their own lives easier, you get outsiders throwing money at trying to innovate around what they've guessed other people's problems to be.