Do you mean how the actual IP laws countries have actually discourage innovation? Or do you mean a theoretical argument for why IP laws will always tend to discourage innovation? For the former, look at the issues with sampling in music, mashups in videos, and orphaned works in copyright generally.
I mean the theoretical argument for why IP laws will tend to discourage innovation. I can see pretty clearly why existing laws do that =]
Sure, and there are also many stories about how the guy who did the real, hard work lost out because someone else stretched a patent to cover his idea.
So this is a discussion of how to successfully implement IP law, not an argument against the idea of such a law.
But, again, these arguments aren't really that persuasive to Libertarians. If they're not convinced that IP rights are 'real rights', they don't want the government enforcing them.
This is why libertarianism seems dogmatic to me. In this case, stopping someone from printing a particular book and selling it (which they couldn't have done if the book was never written!) trumps enriching everyone's lives by rewarding the innovator for his useful new idea and encouraging people to come up with other useful ones. How can anyone subscribe to this ideology?