Actually, the person you are replying to is 100% correct.
The only time the service doesn't work is in an unestablished industry with 0 competitors. In every other industry if you look long term giving things out for free makes exponentially more.
You are absolutely incorrect about medical patents. If it weren't for medical patents, my cousin would have been able to release a cure for a form of HIV she discovered about 5 years back. 5 years! But what happened? A similar modification by a big company has been patented, and they did it merely by patenting every possible variant of the string she used.
Patents are allowing the medical R&D companies to over-recoup the costs of research by a factor of 50+, easily, considering government sponsored research as well.
Lets look at other industries. If cars were given away through promotions (which happens all the time), do you think it might draw up more buzz for the companies?
Lets look at other industries. Take any product, and the more you sell it for, the less people come back for more business. The less you sell it for, the more competitive and more people come back for more business. All products break, or wear down, or need some sort of service. Not all products are worth buying twice in anyone's eyes.
This is also why well trained and good customer service policies make or break a company. Think of Dell's customer service and how people hates them for that.