How do copyrights stifle innovation?
Now I don't know exactly how much the Apotheosis version adds to the body of culture. Most new music is crap, after all. But it does represent artistic innovation, and it was definitely stifled.
What you have in those stories are cases of valuable enterprises that usually benefited in no way from the disclosures in the original patent; the patentholder and the "violator" are usually standing on the shoulders of the exact same giant.
So, what's the equivalent scenario for copyright? The a band called Apotheosis couldn't do a remix of O Fortuna? One supposes there's a valid case to be made that we're all somewhat worse off for not having access to that remix... but it's hard to put it on the same plane as a startup being sued out of existence because something they designed and implemented was inherently fenced off by a patent monopoly.
So what's the better example?
As far as stifling innovation, one only needs to look at the recording companies. The resistance to new technologies, easier ways of accessing "content" - that's definitely restricted by the application of copyright laws. One recent example is Zediva. Copyright then ends up concentrating on a few companies that were able to make deals, rather than ones that are continually innovating in technology. Look at how long it took to get "legal" access to The Beatles music as MP3s.
I don't think you can see copyright as not stifling innovation in those areas.
But, I suppose, we could argue that it's just the horrible overapplication of copyright laws that are stifling innovation. A weaker copyright system would probably work out just fine.
But that doesn't mean copyrights don't stifle cultural innovation. It's just that most people don't care as much about the cultural stuff. O Fortuna is a particularly good example because the words to which Orff set his music were in the public domain, having been written centuries ago. His work could not have been created if the poem was still under copyright.
Of course, that's more to do with it not being FOSS than just being copyrighted.
Consider cross-pollination. Nintendo wanted incidental background music for tetris. They found some tunes in the public domain, and wrote some themselves. Only possible when there's a public domain. The game isn't about the music, but the fact that they could mix good music in made it better.
Closed-software cannot be used as a basis for innovation and improvement by people who could innovate and improve it, if given the chance.