Patents also require disclosure of how something is done, and the history of innovation in the Western world has been one of iterative improvements on patented inventions so as to be granted a new patent.

Software arguably is not suited for a patent system, but patents have worked well for centuries.

So... yeah a patent restricts what others can produce. But parents are supposed to be for things that are novel, which means if it's unlikely for someone else to produce it to begin with. Parents are supposed to help encourage people to innovate. I do think to many patents are given and many aren't novel enough. But I do believe, at least historically, they led to innovations. I also don't think software works be patentable

That fewer patents are filed is not an absence of evidence. It's evidence that fewer patents are being filed. If one believes patent filings are correlated with innovation (which is debatable either way), then it is (non-probative but still significant) evidence that fewer innovations are taking place.