In accordance to the meaning of ‘patent’, it allows and encourages the holder to publicly disclose the innovations in public domain for societal needs.
If patent holder will not get any legal protection, then they would tend to keep their invention as a secret, as any disclosure would amount to the loss of license holder rights. To the inventor a patent system confers certain definite advantages. The incentive for technological innovations is monetary reward. It is not compulsory for an invention to be patented. An inventor may use his invention secretly as long as he can keep it secret. But the chances of keeping the formula secret are meager especially when he has to engage workmen to carry out the invention. There is also danger of a competitor taking out a patent for the article and suing the secret user for infringement.
On the other hand, if a patent is obtained for the invention the patentee gets the exclusive right to use the invention for a definite period, which right can be lawfully enforced against infringers. Further a patent enables the owner to prevent others from copying what the patent monopoly covers unless he agrees to pay royalties. This encourages the growth of technology and enables the public to get substitutes for the patented product which in turn compels the owner of the patent not to overcharge his product. Companies which involve high fixed cost and low marginal cost, like computer processors software, pharmaceuticals, face high commercialization cost of testing, setting up of factory etc. Unless such companies do not have any protective shield for competing with marginal cost, they will hesitate in moving ahead. Patent allows them to purely concentrate on manufacturing process.
It allows inventor to maintain monopoly on the invention for a specified period of time. Generally a patent application must possess of one or two claims, which are new, innovative and commercially viable.