On his first day on the job Googles new CEO announced that he will bid up to $900m for the patent portfolio of now defunct Nortel.


Years ago when I was running a software company, we discussed patents and whether they were value for money. Back then they were more expensive to get (it seemed) and the value wasnt really clear. In the last few years things have changed.


Firstly with new software companies starting literally every day, everyone is looking for a barrier to entry. Some of that barrier used to be financing because it took $5m or more to start a company not so now. Then talent was a barrier, but with good software developers everywhere from Vietnam to Romania, and a virtual network to connect them, that barrier has fallen. Then infrastructure was a barrier and along comes the Cloud.


Factor in a recent decision by the US Supreme Court (Bilsky), that leaves the door open to business-method patents which are the big opportunity for software patents, and patents are getting more interesting.


For a small software company a patent isnt doing much for now. But when that liquidity event happens, the patent can make a big difference in getting buyer attention and in negotiating value. Last quarter Google bought Toronto-based Zetawire for an undisclosed amount no customers no revenue no website two employees one patent.


If I were a small company software CEO again I would seriously get some good patent advice.