> after all, if reverse engineering is acceptable, why not industrial espionage
Because industrial espionage is usually a breach of contract or some kind of law. Reverse engineering is not.
Patents come from a very dubious place - a very old law called Statute of Monopolies, which essentially limited crown given monopolies to new inventions only. I'm sure it was very progressive in 1623. Whether this remains the case in 2010 is a subject of many debates.
I can understand that there could be areas that are helped by giving out monopolies. However, we should do that sparingly. Current practice where every man and his dog can patent practically everything has gone way out of hand.
PS. I'm not sure why there would generally be a problem with using other people's ideas. Humans learn by copying. If we were stripped of that ability, we would not be ourselves any more. I cannot see why it should follow that whenever someone has an original thought, it should not be available to others freely. In fact, in many fields of endeavour this is the norm.