He's referring to the patent system in general. The context is pretty clear:

I’m not opposed to idea of the patent system on general principle (as Stallman, and many others, are). And I think in many fields, the system has and continues to work well.

But for software the system, in practice, is undeniably broken.

At the beginning of the second paragraph he makes a distinction between the system in general and the system as it applies to software. Therefore, in the first paragraph he was referring to the system in general. Maybe that's not what the author meant, but that's what the words say.