Benefits

Primary incentives embodied in the patent system include incentives to invent in the first place; to disclose the invention once made; to invest the sums necessary to experiment, produce and market the invention; and to design around and improve upon earlier patents.

1. Patents provide incentives for economically efficient research and development (R&D). A study conducted annually by the Institute for Prospective Technological Studies (IPTS) shows that the 2,000 largest global companies invested more than 430 billion euros in 2008 in their R&D departments. If the investments can be considered as inputs of R&D, real products and patents are the outputs. Based on these groups, a project named Corporate Invention Board, had measured and analyzed the patent portfolios to produce an original picture of their technological profiles. Supporters of patents argue that without patent protection, R&D spending would be significantly less or eliminated altogether, limiting the possibility of technological advances or breakthroughs.citation needed Corporations would be much more conservative about the R&D investments they made, as third parties would be free to exploit any developments. This second justification is closely related to the basic ideas underlying traditional property rights.specify Specifically, "the patent internalizes the externality by giving the inventor a property right over its invention." A 2008 study by Yi Quan of Kellogg School of Management showed that countries instituting patent protection on pharmaceuticals did not necessarily have an increase in domestic pharmaceutical innovation. Only countries with "higher levels of economic development, educational attainment, and economic freedom" showed an increase. There also appeared to be an optimal level of patent protection that increased domestic innovation.
2. In accordance with the original definition of the term "patent", patents are intended to facilitate and encourage disclosure of innovations into the public domain for the common good. Thus patenting can be viewed as contributing to open hardware after an embargo period (usually of 20 years). If inventors did not have the legal protection of patents, in many cases, they might prefer or tend to keep their inventions secret (e.g. keep trade secrets). Awarding patents generally makes the details of new technology publicly available, for exploitation by anyone after the patent expires, or for further improvement by other inventors. Furthermore, when a patent's term has expired, the public record ensures that the patentee's invention is not lost to humanity.specify
3. In many industries (especially those with high fixed costs and either low marginal costs or low reverse engineering costs — computer processors, and pharmaceuticals for example), once an invention exists, the cost of commercialization (testing, tooling up a factory, developing a market, etc.) is far more than the initial conception cost. (For example, the internal rule of thumb at several computer companies in the 1980s was that post-R&D costs were 7-to-1.)citation needed

One effect of modern patent usage is that a small-time inventor, who can afford both the patenting process and the defense of the patent, can use the exclusive right status to become a licensor. This allows the inventor to accumulate capital from licensing the invention and may allow innovation to occur because he or she may choose not to manage a manufacturing buildup for the invention. Thus the inventor's time and energy can be spent on pure innovation, allowing others to concentrate on manufacturability.

Another effect of modern patent usage is to both enable and incentivize competitors to design around (or to "invent around" according to R S Praveen Raj) the patented invention. This may promote healthy competition among manufacturers, resulting in gradual improvements of the technology base. This may help augment national economies and confer better living standards to the citizens. The 1970 Indian Patent Act allowed the Indian pharmaceutical industry to develop local technological capabilities in this industry. This act coincided with the transformation of India from a bulk importer of pharmaceutical drugs to a leading exporter.citation needed The rapid evolution of Indian pharmaceutical industry since the mid-1970s highlights the fact that the design of the patent act was instrumental in building local capabilities even in a developing country like India. This was possible because for many years prior to its membership in the World Trade Organization (WTO), India did not recognize product patents for pharmaceuticals. Without product patents with which to contend, Indian pharmaceutical companies were able to churn out countless generic drugs, establishing India as one of the leading generic drug manufacturers in the world. Yet in 2005, because of its obligations under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), India was compelled to amend its laws to provide product patent protection to pharmaceuticals. In an attempt to satisfy the competing demands for inexpensive drugs and effective intellectual property protection, the Indian government created a law that afforded protection to pharmaceuticals only if they constituted brand new chemical substances or enhanced the therapeutic “efficacy” of known substances. This law, which is codified under section 3(d) of the Patents (Amendment) Act of 2005,7 has not sat well with some MNCs, including the Swiss company Novartis. Following the denial of a patent for its leukemia drug, Glivec, Novartis challenged the validity of section 3(d) under TRIPS and the Indian Constitution. The Indian Supreme Court ruled against Novartis in a decision that has, and will continue to have, broad implications for MNCs, the Indian pharmaceutical industry, and people around the world in need of affordable drugs.

Although there is no guarantee that patents will be protected, due to multiple different factors that may make a patent moot the primary benefit of patents is seen as protection. This is a misconception. Patents do not protect your invention from being copied. Far from it, it makes your invention public, allowing more people to see and copy it. However, its purpose is to allow the owner of the patent to enforce patent laws on competitors and others who are producing and selling their patented invention. This means that they are paying for a patent which will allow them to take others to court for utilizing their invention. A patent cannot prevent someone from copying an invention, it only allows the owner of the patent to seek recompense for the other party violating the patent and stealing their invention. As such, patents to deter people from copying an invention, bringing them to the owner to seek an alternative solution. This may take the form of granted permission to utilize the patented invention, leasing out rights to use the patented invention, or even selling the patent to another party. All of these options are ways for a different party to utilize a patent, and the latter two are ways for patent owners to make additional money off of their invention(s). In other words, a huge benefit of patents is monetary gain through exclusive rights of selling an invention and/or leasing out a patented invention to another party who wishes to use it. A good example of this is Samsung with their OLED technology, many companies use this technology for their products, such as Apple for their phones, who is a direct competitor with Samsung, but Apple must pay for Samsung’s OLED screen technology directly to Samsung, or another company it has let produce its patented product. Apple cannot, legally, produce its own OLED displays.