Your example would apply to copyright, which is a lot easier to demonstrate.
UNIX is protected by copyright, which is the only way that Linux could exist under current application of patent law since Linux is effectively a UNIX 'clone'.
Had UNIX been patented, under today's court precedents, Linux would be violating most UNIX patents.
And you're right. Patenting 'functionality' is ridiculous. What if Henry Ford had patented the steering wheel? Would each brand of automobile have a different mechanism for guiding it down the road - or would Ford Motor Company be collecting royalties from all of the other automobile manufacturers?
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