I think you are confusing patent protection with copyright protection. Software is still covered by copyright law, and the licensing agreements you choose to put on your software product is still what defines how people can use your software product, and what their access to that software is.
If I write a program and release it under a license that does not allow access to the source code, and does not allow users to distribute it further, that is still perfectly valid. But if someone decides that they want to write their own software that does the same thing, as long as they do not use anything from my product, they are well within their rights to do so.
UNIX platforms have been around for 50 years and the model they use has become essentially a standard. But until recently, UNIX was costly and the licensing was rather prohibitive. So in the 1980s, this man decided that he'd like to write his own version of a UNIX-like platform, and release it freely and openly for everyone to use. That platform was GNU and the man that started it was Richard Stallman. GNU is now one of the most widely used platforms on the market. Even some UNIX vendors use some of the GNU utilities themselves. It also became the system that sits on top of the Linux kernel.
But while GNU replicates a lot of the functionality from UNIX utilities, it uses absolutely none of the code from UNIX. It was written independently to ensure that it was freely available to everyone.
That hasn't stopped UNIX platforms from continuing to be sold, or continuing to be innovative. But it has pushed UNIX vendor to improve their platform significantly to differentiate themselves from the free platforms.
Software Patents would not have allowed GNU to exist at all. Software patents are, without exception, patenting ideas rather than implementation. This means that if one entity holds a patent for an idea, no other entity can come up with an alternate way of achieving the same/similar end result. This gives the patent holder an extended monopoly on an idea and stifles innovation in the software industry.
Software copyrights allow you to release and protect your software from blatant copying, while still allowing people to improve upon and innovate beyond your original idea. Software patents do not.