A patent is a right provided an inventor to exclude others from making, using and selling an invention. In the United States, only an inventor can receive a patent -- while in most other places anyone who files first is entitled a patent. As such, a patent is a form of monopoly. This monopoly is granted for a limited term in exchange for a complete disclosure of the idea. So in a manner of speaking, a patent is a sort-of contract where an inventor shares an idea with the public in exchange for receipt of exclusive right to exploit it -- for up to 20 years.
Patents are very important for business in competitive environments. Where competitors are many and innovation being an important distinguishing factor, it can be critical to block others from copying innovative things and ways of doing things. When it is possible to block others from copying, it becomes more worthwhile for a company to invest large amounts of money in the pursuit of new discoveries, research and development. As such, patents encourage spending on research and development and result in an increase in innovation.
As modern technology tends to be highly evolutionary and subject to copying, patents have come to be a very important part of most sophisticated business strategy. The largest, most successful companies pursue innovation and protections for their innovations to assure their continuous growth. Small emerging companies also protect their investors position by developing their intellectual property along with their novel business model and technologies.
Small and independent inventors also benefit when protecting their ideas prior to introducing those ideas to potential partners. In many cases, an established business concern will refuse to have meetings with independent inventors prior to a patent application on file to avoid contaminating their in-house innovation pool.