Patents have always protected firms from competition. That has always been part of their purpose. Another part of their purpose is to enable some one ordinarily skilled in the art to duplicate the invention when the patent expires. That's the trade-off that justifies patents, as opposed to treating inventions as trade secrets.
What has changed is the definition of obviousness and consequently innovation. Now something is innovative if no one can point to prior art, notwithstanding that it may be obvious to the proverbial someone skilled in the art. Today, the pencil plus eraser would be patentable.
Another thing that has changed is that patents have become so vague that they cannot be duplicated nor can anyone be certain what they cover. This is particularly a problem for business method and software patents.