Here's a fascinating question:
how would you feel as a Second Life resident if a real world company stepped into Second Life and started patenting things left right and centre that you'd already done without their knowledge? The real world companies already have processes and budgets for setting up and defending patents; but being new to Second Life they may not know about what people have made already.
The issue raised here is what should be patentable in Second Life? This is easy, actually: nothing. Everything in Second Life is code; in particular, all the interesting stuff is done using the SL scripting language. Since neither software nor algorithms can be patented (at least in rational parts of the world), this clearly means that nothing in SL can be patented.
And that's right. If you could patent things, then, as the post puts it, things would get crazy:
How would you feel if using a cylinder for a chair was patented? And then a box prim for a chair was patented, and so on. You'd be wading through patents before you even rezzed a prim.
And this is precisely the situation for software in those parts of the world that allow broad software patents. That is, programmers have to worry that unwittingly they are infringing on somebody's "patent" on that code, even if they are simply employing the basic building blocks of programming - the "cylinders".
In what almost amounts to a thought experiment, we see again the absurdity of allowing software - which is essentially just ideas and algorithms - to be patented. All it does is to impeded innovation. And to those who, in the absence of patents, worry about people stealing bits of their code, that's what copyright is for: it protects particular instantiations of ideas in code, not the ideas themselves, which remain freely available to all for further use and development.
It is no coincidence that the GNU GPL - essentially the constitution of free software - depends on copyright law to work. There is no contradiction between free software and copyright - quite the contrary; it is patents and free software that are intellectual matter and anti-matter.