Vado Deals With a Cheating Woman on 'Song Cry'

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David Livingston, Getty Images

It takes a lot of cojones to remake a Jay Z classic, but that didn’t stop Vado from taking on the challenge.

In his new cut ‘Song Cry,’ the Harlem rapper spits about love lost, and being cheated on by a woman he’s involved with. “Look bae, I could tell if you could you would stay / But couldn’t wait and pray for the day we in a good space / Shook face you had soon as I asked you / No need to look all sad cause you ain’t have to,” he raps.

The song is produced by Dolla Bill Kidz, as Vado chooses not to rhyme over the original version, giving the effort a new spin. And he goes outside of the box here, choosing to play the role of a jilted lover instead of the player.

“Oh, ’cause you out late that’s my fault? / You let a n—- eat on our plate, use my fork? / Here’s a few racks out the safe, some fly clothes / Keep the Cartier but bae I need time off,” spits Vado.

Are you a fan of the rhymer’s new track? Tell us your thoughts in the comments below.

Listen to Vado’s ‘Song Cry’

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Judge Considers Limits on Apple’s Future E-Book Deals

In a sometimes testy hearing in United States District Court in Lower Manhattan, Judge Denise L. Cote said that she was considering a plan in which Apple would negotiate contracts with publishers in a staggered fashion — possibly six to eight months apart — to prevent them from engaging in another price-fixing conspiracy.

Judge Cote ruled in July that Apple colluded with publishers to raise the price of e-books before the introduction of its iPad in 2010. Those charges were brought against Apple and five major publishers by the Justice Department in 2012. The publishers all settled, but Apple held out and went to trial.

The judge’s proposal was a scaled-back version of the guidelines put forth by the government last week, when it suggested that Apple be forced to end its agreements with the five settling publishers and avoid entering similar agreements with producers of movies, TV and music. Apple responded by calling the proposal a “draconian and punitive intrusion” into its business.

The publishers who settled also objected to the Justice Department’s proposed remedy, saying that it would fundamentally change their existing settlements.

In court on Friday, Judge Cote said that she wanted an injunction to be tailored so that it would encourage innovation in a rapidly changing e-book business and yet prevent collusion on price in the future.

“I have no desire to regulate the App Store,” she said.

But Judge Cote also slammed the publishers for lacking “contrition” and said that she feared future collusion in the e-book market. Although the publishers eventually agreed to settlements, none of them admitted wrongdoing.

Judge Cote said that the publishers had played “a rough and tumble game” and engaged in “blatant price fixing.”

“None of the publisher defendants have expressed any remorse,” she said. “They are, in a word, unrepentant.”

Lawyers for Apple and the government said in court that they would meet in the next week and discuss the judge’s proposal. Another hearing is expected later this month.

Apple and the Justice Department declined to comment.

Hachette Book Group, HarperCollins and Simon & Schuster settled in April 2012; Penguin Group USA and Macmillan settled later. Penguin has since merged with Random House, which was not named in the lawsuit.

Bits Blog: A Game That Deals in Personal Data

A demo of the Data Dealer game.

All kinds of companies and services – social networks, data brokers, loyalty card programs to name just a few – amass and analyze details about millions of consumers’ activities and preferences. But the inner workings of this surveillance economy remain largely opaque to the public despite the recent revelations of widespread government data-mining of people’s phone and e-mail records.

Now a group of Web developers in Austria has introduced an online game called Data Dealer that aims to make the business of consumer profiling more transparent. The animated game encourages players to amass and sell fictional profiles containing details like the names, birth dates, weight, height, shopping and dietary habits of imaginary consumers.

The idea behind this cartoon data collection ecosystem is to give players a visceral sense of the widespread trade in personal data, says Wolfie Christl, a co-creator of the game.

“If you tell people they should be a bit careful, nobody listens. It’s boring,” said Mr. Christl, 36, who lives in Vienna. The game, he said, is intended to help people “understand a few things – what kind of personal data exists, which attributes are collected, who is collecting this data, why and what they are using it for.”

A screen shot from Data Dealer, an online game that explores the personal data ecosystem on the Internet.

In Data Dealer, each player starts out with an avatar of a database, a gray anthropomorphic vault containing more than a million profiles and a budget of $5,000.

Players can buy additional profiles from a variety of sources like a dating Web site, a sweepstakes company – or even a disgruntled nurse named Mildred who is selling access to her hospital’s patient database.

Players can also earn money by selling their profiles to a fictional large employer called “Star Mart,” a health insurance company or an imaginary government entity referred to as “Central Security Agency.”

Each vendor lists the consumer details it has to sell.

The fictional dating site, for example, is selling the relationship status, sexual orientation and political attitudes of its members, along with their birth dates, genders, phone numbers and e-mail address. The cost to the player: $150 for 8,000 profiles.

Although hypothetical members of the dating site may think they are anonymous, the game suggests that data dealers could use such disparate details to connect people’s dating profiles to their real names.

“For the chance to find their soul mate, lonely souls will pour out their hearts to you and let you in on their deepest secrets,” the game says. “Once you line up e-mail addresses and pseudonyms with the real names, things start to get interesting.”

Data dealer also explains to players the value of different types of information.

Of e-mail addresses, for instance, the game says: “once you know someone’s e-mail address, you can pinpoint them anywhere, no matter which nickname or pseudonym they use. In addition, e-mail addresses can be sold quite profitably for marketing purposes.”

Although the first version of Data Dealer is meant only for individual players, the game’s developers are raising money on Kickstarter this week to finance an upgraded version that will let people play against one another – and hack each others’ databases.

Mr. Christl says he hoped the game inspired people to demand more control over the information collected and disseminated about them.

“I think at the moment all this data is being controlled by big companies and by government institutions and not by people themselves,” Mr. Christl says. “We need a self-determined usage of personal data in the future. Some changes are needed to achieve that.”

Although Data Dealer is only a game, the timing of its Kickstarter campaign seems fortuitous. Offline, federal regulators have been urging real data dealers to make their practices more transparent.

A few weeks ago, for instance, Julie Brill, a member of the Federal Trade Commission, proposed that data brokers — companies that gather and analyze information from multiple sources about millions of consumers — give the public more access to and control over details collected about them.

“Data brokers should develop online tools so consumers could see the information multiple companies have about them,” says, Ms. Brill. The name of her initiative: “Reclaim Your Name.”

DealBook: Potential for Deals Drives a Big Surge in the Biotech Sector

Dominic ChavezMichael Thomenius of Epizyme, a new biopharmaceutical company in Cambridge, Mass., thought to be a prime takeover target.

8:28 p.m. | Updated

When Onyx Pharmaceuticals, a cancer drug developer, turned down a $10 billion acquisition bid by Amgen last month and put itself up for sale, its share price soared more than 50 percent, touching off an investor frenzy in biotechnology.

Among the beneficiaries was Epizyme, a newly public Massachusetts company that some Wall Street analysts predict could also become a takeover target. Shares of Epizyme, which is working on drugs to treat types of leukemia and lymphoma, have risen 20 percent since July 1, and they have more than doubled since the company’s initial public offering on May 31.

Six other biotechnology companies completed I.P.O.’s in June, and five or so are lined up behind them — an incredible run considering the window for biotech offerings had been all but slammed shut since the 2008 financial crisis. The hot streak has been driven largely by the potential for deal-making in the industry, investors and analysts said.

The feared “patent cliff” for brand-name drugs has caused billion-dollar blockbusters like Pfizer’s cholesterol drug Lipitor and Bristol-Myers Squibb’s blood thinner Plavix to lose ground to generic competition, so the pharmaceutical industry has been hunting for innovation among small biotechnology companies, as both takeover targets and licensing partners. There were five acquisitions of venture capital-backed biotech companies in the second quarter alone, according to data from Thomson Reuters and the National Venture Capital Association.

“I think the big pharma companies are going to continue to look outside to find the next wave of innovative therapies,” said Dennis Purcell, senior managing partner of Aisling Capital, a life sciences venture capital firm based in New York. On June 17, an Aisling portfolio company in San Diego, Aragon Pharmaceuticals, which has a prostate cancer treatment in midstage human trials, was bought by Johnson & Johnson for $650 million up front, plus the potential for an additional $350 million in payments tied to research milestones.

Still, biotechnology is more prone to disappointments than perhaps any other industry — a risk that came to light not long before this recent run of I.P.O.’s. In May, shares of a former high flyer, Aveo Pharmaceuticals, fell nearly 50 percent when an advisory panel to the Food and Drug Administration urged the agency to reject the company’s kidney cancer drug because of questions about its efficacy.

That so many investors have been able to overlook such uncertainty and jump into a new class of companies with unproved science shows a new tolerance for risk on the public market, some experts say. The robust deal-making environment helps.

“People are hungry for growth,” said Erik Gordon, a professor specializing in life sciences entrepreneurship at the University of Michigan’s business school. “When you see something like Onyx telling Amgen” its offering price is too low, “you have to ask, what’s the downside? The downside is bad news, but if that doesn’t happen, the company you’ve invested in could be taken out at a huge gain.”

The 16 biotechnology companies that have gone public this year are up 48 percent on average from their offering prices, according to data provided by Nasdaq. As of Tuesday, four of the top 10 performing companies on the Nasdaq year-to-date were biotechs: Stemline Therapeutics, Bluebird Bio, Epizyme and Prosensa Holding.

“The fact that these companies can get out reloads the capacity of the venture funders” to turn to the public markets, said Samuel Isaly, managing partner of OrbiMed Advisors, which manages the Eaton Vance Worldwide Health Sciences Fund in addition to private equity and hedge funds. “We’re back to the good old days of before the financial crash.”

The biotechnology I.P.O. market is so frothy, in fact, that some companies are not waiting to take advantage of it. Hans Schikan, the chief executive of the Dutch biotech company Prosensa, said he and his management team originally planned their I.P.O. for a week or so after the Fourth of July holiday, but when they saw the positive investor response to Epizyme and others, they rushed out on June 28 instead. “When the window’s open, you’d better use it,” Mr. Schikan said. Prosensa’s shares opened $7 above its $13 offering price and are up 102 percent so far. It closed up 1.1 percent in trading Thursday on the Nasdaq, closing at $26.26.

One gateway for acquisitions in the biotech sector is research partnerships, and those are increasing as well.

Epizyme did not start human testing of its lead drug until late last year, but it attracted plenty of interest from big pharmaceutical companies long before that. The company formed research partnerships with GlaxoSmithKline, Celgene and Eisai, which together were worth $125 million in nonequity financing.

Simos Simeonidis, an analyst at Cowen & Company, predicts that if one of Epizyme’s two leading cancer drugs shows even a hint of success in clinical trials, “a lot of big pharmas or big biotechs are going to want to own the platform. The possibility of an acquisition in my mind would be very high,” he said.

Several other members of this year’s biotech I.P.O. class have rich partnerships. Bluebird Bio of Massachusetts signed a three-year oncology research deal with Celgene in March, which included a $75 million upfront payment. Bluebird’s I.P.O. was on June 19, and its stock has climbed 78 percent.

PTC Therapeutics, a New Jersey company that went public the next day and raised $114 million, has a $30 million deal with Roche to study treatments for spinal muscular atrophy, and an oncology partnership with AstraZeneca that included an undisclosed upfront payment. Both deals included the potential for milestone bonuses. Its shares have risen 9 percent. On Thursday, they rose 3.4 percent to close at $16.34.

Robert J. Gould, the chief executive of Epizyme, said he was aware that research partnerships often blossomed into full-blown buyout offers. But “we have no intention of positioning ourselves to be acquired,” he said. Bluebird and PTC, both still in post-offering quiet periods, declined to comment.

Venture capitalists in life sciences predict that both the pace and the value of licensing deals will accelerate. “Pharma certainly is evaluating every single asset of every single company that’s out there and acting on it,” said Noubar Afeyan, managing partner and chief executive of Flagship Ventures, an investor in Agios Pharmaceuticals of Massachusetts, which announced its intention on June 10 to raise $86 million in an I.P.O. Agios has a $150 million cancer drug development deal with Celgene.

It is not just cancer treatment that is generating excitement among investors. Prosensa is developing drugs to treat Duchenne muscular dystrophy and other muscle disorders. PTC has its own treatment for muscular dystrophy and is also developing drugs to fight cystic fibrosis and infectious disease. The one unifying theme in all the companies that have generated excitement on Wall Street is the rise of personalized medicine, said Christoph Westphal, a longtime biotechnology entrepreneur and a founder and partner of the Longwood Fund. “Many companies that have done well recently have a specific molecular-medicine approach to a serious disorder that has no other therapies,” he said.

Prosensa’s two lead drugs for muscular dystrophy, for example, are being tested in small groups of patients whose disease is caused by specific genetic mutations, which can be detected with diagnostic devices that the company is using with the drugs.

Another factor in the biotech industry’s favor is that regulators have become more supportive of drugs that address high unmet medical needs. In July 2012, the Food and Drug Administration Safety and Innovation Act established the “breakthrough therapy” designation, which gave the agency the authority to speed its review of drugs to treat life-threatening ailments.

“The regulators, notably the F.D.A., have been particularly willing to come up with new strategies to enable the rapid development of drugs for which there is a dramatic effect in a defined patient population,” said Robert Tepper, a partner at Third Rock Ventures, an investor in both Bluebird and Agios. “If you can stratify the patient population you want to treat through genetic analysis, for example, you can move quite quickly through early-stage trials.”

Media Decoder: Apple Is Said to Be Pressing to Complete Deals for Internet Radio

After months of stalled negotiations over its planned Internet radio service, Apple is pushing to complete licensing deals with music companies so it can reveal the service as early as next week, according to people briefed on the talks.

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Apple’s service, a Pandora-like feature that would tailor streams of music to each user’s taste, has been planned since at least last summer. But Apple has made little progress with record labels and music publishers, which have been seeking higher royalty rates and guaranteed minimum payments, according to these people, who spoke anonymously about the private talks.

While it is still at odds with some music companies over deal terms, Apple is said to be eager to get the licenses in time to unveil the service — nicknamed iRadio by the technology press — at its annual developers conference, which begins June 10 in San Francisco.

Apple has signed a deal with the Universal Music Group for its recorded music rights, but not for music publishing — the part of the business that deals with songwriting. Over the weekend, Apple also signed a deal with the Warner Music Group for both rights. It is still in talks with Sony Music Entertainment and Sony’s separate publishing arm, Sony/ATV, whose songwriters include Taylor Swift and Lady Gaga.

Representatives for Apple and the music companies declined to comment.

Apple’s Internet radio feature is expected to be free and supported by advertising, and would represent a relatively late arrival by the company into what has become a fast-growing — if low-margin — sector of the music business. Pandora has more than 70 million regular users, the vast majority of whom do not pay, and similar features have been introduced by Google, Spotify and the radio company Clear Channel Communications.

The licensing fees paid by Pandora have been a sore spot for music companies, which see promise in Apple’s service, particularly since it can be linked to sales through Apple’s iTunes store, but want higher rates. Publishers, for instance, are paid about 4 percent of Pandora’s revenue, but want as much as 10 percent from Apple.

Apple is said to be negotiating directly with the music groups because it wants more extensive licensing terms.

DealBook: In Venture Capital Deals, Not Every Founder Will Be a Zuckerberg

Harry Campbell

It’s the dream of entrepreneurs to sell their company for millions of dollars. But the dirty secret of venture capital is that the dream can be dashed as the venture capitalists make millions in a sale, leaving the founders with nothing.

A recent Delaware court case arising from the 2011 sale of Bloodhound Technologies illustrates how this happens.

Bloodhound was founded in the mid-1990s by Joseph A. Carsanaro to create fraud-monitoring software for health care claims. After several years of going it alone with a handful of colleagues, Mr. Carsanaro was able to raise Bloodhound’s first venture capital round for $1.9 million in 1999, followed by a second $3.1 million round in 2000.

When the Internet bubble burst, the company underwent rocky times. It was then that the venture capitalists seized control. Mr. Carsanaro was pushed out as chief executive. By 2000, he was gone from the company, as were four other members of his founding team.

For the next decade, Bloodhound recovered and slowly grew, raising seven more rounds of financing. In April 2011, the company was sold for $82.5 million. It was a time for Mr. Carsanaro and his founding team to celebrate their millionaire status.

But venture capital investments are structured to ensure that the venture capitalists are paid before founders and employees. When venture capitalists invest, they typically demand preferred shares that accrue a yearly dividend of about 8 percent. The dividend goes unpaid until the company is sold. In a sale, the original amount and the interest all come due. It must be paid out before the common shares, which are typically held by the founders and other employees.

The requirement that the venture capitalist be paid first, and with interest, can sometimes hit founders and employees in a brutal manner, as Mr. Carsanaro and his colleagues discovered.

The venture capitalists took almost all of the sale price. Bloodhound also paid a $15 million bonus to its current management team. The five founders of Bloodhound were paid in total less than $36,000. One received all of $99.

There is not much information on payouts to founders and employees when a company backed by venture capital is sold. But from the few studies on the subject, it appears that the situation involving Bloodhound is all too common.

The most recent study, by Profs. Brian J. Broughman and Jesse M. Fried, found that among a sample of venture capital deals, the common investors in roughly half the cases were entitled to nothing when the company was sold, even when the sale was for tens of millions. And in all but one instance, the majority of the sale proceeds went to the venture capitalists and other holders of preferred shares.

An unpublished study by Shikhar Ghosh at the Harvard Business School found that three out of four companies backed by venture capital did not return the investment. Again, it is in these cases where the founders and employees typically are entitled to receive no payment.

For those entrepreneurs who think they will be the next Mark Zuckerberg and ride their company to riches, think again. A number of studies have found that most chief executives of companies that take venture capital investments end up being replaced.

These are the successful businesses. The rule of thumb among venture capitalists is that some 20 percent to 30 percent of companies fail, returning nothing to any investor, including the venture capitalists.

The Bloodhound case is a reminder that the founders of start-ups backed by venture capital often end up nothing like Mr. Zuckerberg. Instead, they find themselves thrown out and without significant profits even if their company is sold.

Venture capitalists will argue that this is the price to pay to get their money and services. Cash is king, and in order to survive, venture capitalists will demand a high price and return.

Yet entrepreneurs can protect themselves. Professors Broughman and Fried found in their study that founders who negotiated greater control rights ended up receiving on average $3.7 million more. They did this even when the common shareholders were not entitled to a dime. By negotiating board seats or other representation, the founders were able to ensure that a sale happened only with their approval and a demand for some payment in return.

In other words, the rights negotiated by entrepreneurs when taking venture capital money really matter. Many entrepreneurs are so excited to get money that they don’t push for such rights or just don’t know to ask. Yet those who negotiate to keep a say in their company have a future, while those who don’t are more likely to be tossed aside. And it can be that this happens even in lucrative situations. Remember that Mr. Zuckerberg would have been forced by his venture capital investors to sell Facebook had he not kept control.

In the case of Bloodhound, its founders were pushed out of the company about eight years before the sale. During that time, they lacked control or ability to stop the venture capitalists from financing the company on the venture capitalists’ terms. The only substantial communication the founders had after they left was when they found out that the company had been sold for a huge price and that they would receive almost nothing.

The five founders sued in Delaware court, claiming that Bloodhound’s board and the venture capitalists had structured later rounds to favor themselves and dilute the payout of the founders. In a motion, the defendants countered that they acted fairly and that the plaintiffs’ claims were untimely because they were brought years later.

J. Travis Laster, vice chancellor of the Delaware Chancery Court, found that the claims that the venture capitalist had favored themselves to the detriment of the founders could be a viable claim claim if the facts they stated were true.

If Bloodhound’s founders are successful in their lawsuit, the case could change practices. It might require boards that take venture capital money to consider the founders and their interests before taking the next round. This could force boards to lean against diluting the payout of the founders and employees to avoid litigation.

Yet even if Bloodhound’s founders prevail, other entrepreneurs will sometimes find that their company is sold with nothing going to them. The sad reality is that there are times when the price demanded by the venture capitalists for the company to survive means that the founders will lose. Let’s face it, sometimes the company survives only because of that money and the skill and effort that the venture capitalists put in. This may have been the case in Bloodhound.

But the Bloodhound case publicizes this practice and will perhaps push boards to think harder before the founders are discarded. This may foster caution among venture capitalists, but the only thing that will truly save entrepreneurs is negotiating harder in the beginning. They may otherwise find themselves like the Bloodhound founders, left with nothing.

Yahoo’s Choice of New Chief Financial Officer Suggests a Plan for Deals

But two months in, she has yet to do the one thing that shareholders, analysts and advertisers so desperately seek: articulate a clear vision for the flailing Internet company, whose revenue has flattened and stock price has dropped by half over the last five years. She spoke to employees on Tuesday, roughly outlining her plans. The company, however, did not disclose any details.

An executive hiring, announced Tuesday, may offer a hint to her thinking: Ms. Mayer announced that she would replace Tim Morse, Yahoo’s chief financial officer, with Ken Goldman, the current chief financial officer of Fortinet, a public computer security company.

Analysts said the ouster of Mr. Morse, who had a history of cost-cutting, suggests Yahoo is ready to expand through renewed investments and acquisitions.

“Tim Morse was ‘Mr. Margin Expansion,’ ” said Colin Gillis, an Internet analyst at BGC Partners. “To turn the company around and compete with the big boys, Yahoo will need to spend, spend, spend.”

With 700 million users each month, Yahoo remains one of the most visited sites on the Web, but it has been ceding its share of the online display ad market to rivals like Facebook and Google.

To lure back advertisers, Ms. Mayer said she would focus on user experience and on mobile, where Yahoo has yet to dip a toe. She told employees to expect “acqui-hires” — Silicon Valley-speak for acquisitions made for talent rather than technology.

Ms. Mayer is expected to have a baby in the next few weeks, but has said she expects to return to work quickly. Previous chiefs — four in the last five years, plus two interim chiefs — have failed to carry out their own long-term plans, largely because they have been unable to articulate what it is that Yahoo actually does.

Yahoo made its name in search but lost that market to Google and then proceeded to miss the boat on every big Internet trend since. It was too focused on reinventing itself as a multimedia company to notice people were migrating to social networks and mobile devices as gateways for information and entertainment. Yahoo’s home page remains cluttered and sorely lacking a brand of its own.

Board members hope Ms. Mayer will restore some life to the moribund brand. She came from Google, where she was hired as one of its first engineers. She recently closed a $7.6 billion deal with Alibaba that gives Yahoo, after taxes and paybacks to shareholders, $625 million. She indicated Tuesday that employees should expect acquisitions, said one Yahoo employee who spoke on the condition of anonymity.

But Yahoo has had a difficult time persuading entrepreneurs to join. In 2009, Google’s bid to acquire Yelp fell apart at the last minute after Yahoo offered to pay 50 percent more than Google. According to one person close to the talks, both deals fell apart because Yelp’s management team refused to work at Yahoo and Yelp’s board refused Google’s terms.

More recently, the founder of a start-up, who refused to be named for fear it would jeopardize a business relationship with Yahoo, said Yahoo recently inquired about a potential acquisition.

The person, who has also been courted by Facebook and Google, agreed to a meeting but said the company was turned off by Yahoo executives’ failure to do basic due diligence.

“At Facebook and Google, they know your underwear size before you walk in the door,” this person said. “At Yahoo, it was clear they hadn’t even Googled me.”

DealBook: With Smartphone Deals, Patents Become a New Asset Class

Daniel Borris for The New York TimesTRADING IDEAS Steven Steger, left, and David Berten, co-founders of Global IP Law Group, a firm specializing in patent legal and advisory work. It can be hard to keep up with the pace of change in the industry: “In patent law, you’re at the cutting edge of everything, and that’s shifting all the time,” Mr. Berten said.

David Berten has spent his legal career as a mercenary student of technological change. He has educated himself in one field after another: chemical coatings, genetics, navigation systems, semiconductors and digital communications software.

Keeping up is a constant challenge. This month, the 48-year-old lawyer was in his Chicago office, discussing past cases while scanning news Web sites and technology blogs for details on Apple’s iPhone 5, which was being introduced in San Francisco that day.

“We have to know what’s in it,” Mr. Berten said. “In patent law, you’re at the cutting edge of everything, and that’s shifting all the time.”

His firm, the Global IP Law Group, is a sign of the fast-emerging patent marketplace. Global IP, founded in 2009, is one of several boutique firms specializing in patent legal and advisory work that have cropped up recently. Silicon Valley is home to a cluster of them, including Inflexion Point Strategy, Epicenter IP Group and 3LP Advisors.

Though created by lawyers, these companies are hybrids: more merchant banks than law firms. They have legal expertise, but focus on valuing and selling patents and giving strategic advice.

Global IP made its name as an adviser to Nortel Networks, a bankrupt Canadian telecommunications maker that sold its 6,000 patents for $4.5 billion to a group of six companies led by Apple.

The high price paid for the Nortel portfolio set off a bull market in patents that can claim some snippet of smartphone technology. By one estimate, as many as 250,000 patents may touch a modern smartphone. So patents have become defensive and offensive weapons in the smartphone wars, with the major companies suing one another in courtrooms around the world.

A few months after the sale, the big loser in the Nortel auction made its move. Google agreed to buy Motorola Mobility for $12.5 billion, and about $5.5 billion of that was the value of Motorola’s patents, Google said in a government filing this year. Smartphones made by Samsung and other companies are powered by Google’s Android software, making Google and Apple archrivals in smartphone technology.

The smartphone patent megadeals may be over now that the two main adversaries have armed themselves. An attempt by the bankrupt Eastman Kodak to sell 1,000 digital imaging patents stumbled recently, as bids from potential buyers like Apple and Google came in far below the $2.2 billion to $2.6 billion Kodak had said the patents were worth.

But the huge deals, while exceptional, were made possible by a broader trend: patents have become a new asset class.

Traditionally, patents sat on corporate shelves and were occasionally used as bargaining chips in cross-licensing deals with competitors. But that began to change in the 1990s, when technology companies like Texas Instruments and I.B.M. started to regard their patent portfolios as sources of revenue, licensing their intellectual property for fees.

Today, companies routinely buy and sell patents, mostly in deals that draw little attention, for millions of dollars instead of billions. The question, experts say, is how big the market will become.

“Patents are a tricky asset to trade,” said Josh Lerner, an economist at the Harvard Business School. “But there is clearly a huge amount of value in intellectual property. And I think what we’re seeing is the beginning of a lot more monetization and trading of intellectual property rights.”

A sizable specialist industry has developed to build the marketplace for trading ideas. The players include patent aggregators like Intellectual Ventures and RPX, patent brokers like Ocean Tomo and ICAP, hedge funds, investment banks and law firms.

Yet boutique firms like Global IP play an important role, offering specialized expertise and an entrepreneurial approach. “We take patents and try to make money from them in all ways known to man — sales, licensing and litigating, if necessary,” Mr. Berten said.

Global IP opened in 2009 with two lawyers, Mr. Berten and Steven Steger. The firm now has 10 lawyers. About two-thirds of its business is selling patents, and it is working on more than two dozen portfolios. Most work is done on a contingency basis, with a sliding scale of fees that can reach 40 percent on projects that involve litigation, Mr. Steger said.

In the Nortel project, Mr. Berten and his team built a vast database of the Nortel patents, tracking the history of each through the government patent office, citations in other patent applications, uses in license agreements and filings in other countries. “It was a boatload of work,” said George Riedel, former chief strategy officer at Nortel.

Mr. Berten and Mr. Riedel, along with Nortel’s bankers from Lazard, made presentations to companies in Silicon Valley and Europe. Mr. Riedel said Mr. Berten showed an impressive grasp of detail, down to individual patents and claims, when challenged by lawyers at the major technology companies.

His job, Mr. Berten said, was to “identify the value of patents and then demonstrate that value to potential buyers.”

The auction was run by Nortel’s bankruptcy lawyers at Cleary Gottlieb Steen & Hamilton. The winning bid of $4.5 billion was well above the $2 billion to $3 billion projected. “Sure, I was surprised,” Mr. Riedel said. “We were fortunate to be in the midst of an ecosystem battle in smartphones.”

In the Kodak bankruptcy, Global IP was brought on in a very different role: as an outside adviser to the unsecured creditors, including Wal-Mart Stores and Sony Pictures Entertainment. Its job was to determine if the proposed auction was undervaluing the patents, and to advise the creditors if they might be better off taking another approach, like licensing the patents.

The very different experiences of Nortel and Kodak point to the many factors that go into pricing patents. Timing, competitive forces, regulation and court rulings all have an effect, said Ronald S. Laurie, managing director of Inflexion Point Strategy.

“Patents are a volatile, spot market,” he said. “This is a market, but a market that is more like art than stocks or oil.”

Ron Epstein, chief executive of Epicenter IP Group, agreed that pricing patents, especially large portfolios, was difficult. But he said he thought corporate trading in patents would become more commonplace, and pricing more routine. Someday, he predicted, patent acquisition costs may be a standard line item in corporate earnings statements.

“By fits and starts, we are moving to a more efficient marketplace for innovation,” Mr. Epstein said.

Calling patents an asset class is shortsighted, said Kevin Rivette, a founder of 3LP Advisors. The larger value of a portfolio, he said, can be as a strategic tool to negotiate lower costs from a supplier or to alter a rival’s product plans.

“You can use patents to change the competitive landscape,” he said.

4-Year Deals for Unions at Verizon

The contracts, covering workers from Maine to Virginia in Verizon’s landlines division, come after 16 months of tense negotiations that included a two-week strike a year ago to protest the company’s demands for concessions. A ratification vote is expected in the next month.

At a time when many unions are facing demands for pay and pension freezes, Verizon’s main unions — the Communications Workers of America and the International Brotherhood of Electrical Workers — were able to preserve the current pension plan for existing workers.

But the unions did agree that future hires covered by the contracts would no longer receive traditional pensions and would instead have 401(k) accounts with a substantial company match.

The agreements, effective Aug. 1, 2011, to Aug. 1, 2015, include an $800 ratification bonus for those covered: field technicians, call center workers and cable installers.

Larry Cohen, president of the communications workers, criticized what he said was Verizon’s hard-line approach, coming when the company had $2.4 billion in net income in 2011 on revenue of $110 billion.

Mr. Cohen said that while some unions have lost ground in concessionary contracts, “we’ve maintained our living standards in this contract.”

“Because of what’s going on in America, every employer, regardless of its financial wherewithal, believes it’s obligated to cut the costs of front-line employees,” Mr. Cohen said. “But we held our own. This is an incredibly profitable company, and the reality of today in America is if you hold your own, that’s a victory.”

Verizon issued a statement praising the deal. “We believe this is a fair and balanced agreement that is good for our employees as well as for the future of the wireline business,” said Marc C. Reed, Verizon’s chief administrative officer. “It provides competitive wages, valuable benefits and affordable quality health care while giving the company new flexibility to better serve customers and become more efficient.”

The contracts cover workers in Verizon’s traditional landlines operation and its new FiOS Internet and cable operations, but only a handful of workers at Verizon Wireless, the highly profitable cellphone joint venture that is largely nonunion and in which Verizon Communications is the majority shareholder.

Verizon originally pushed for a pension freeze for current workers, significantly higher employee contributions for health coverage, an end to all job security provisions and freedom to do as much outsourcing as it wanted.

As part of the deal, union officials said, the company will maintain the same level of health coverage and the workers will pay 20 percent of their overall health coverage costs, roughly double the old percentage. That provision is expected to increase out-of-pocket health care costs for family coverage by more than $1,000 a year.

Verizon has repeatedly argued that it needed many concessions as a way to reduce costs in its landline business because that division’s consumer base and profit margins have shrunk over the last 10 years. Many customers have dropped fixed-line phones and turned to competing options like mobile phones, cable and Internet calling.

In defending the demand for givebacks, Verizon’s chief executive, Lowell C. McAdam, wrote in a letter to employees last year, “The existing contract provisions, negotiated initially when Verizon was under far less competitive pressure, are not in line with the economic realities of business today.”

Union leaders said the tentative settlement enabled them to preserve most job security protections and still limit some outsourcing, although some union members could be transferred into different Verizon jobs.

Union officials said the raises would total $5,500 over the life of the four-year contracts. They said the typical Verizon union member earns $70,000 a year before overtime.

For future hires under the tentative agreements, Verizon would provide a dollar-for-dollar match in 401(k) contributions up to the first 6 percent of pay, and then, depending on the company’s performance, it might add as much as 3 percent more in profit-sharing. Union officials said Verizon also agreed to reinstate 37 workers it had fired after accusing them of misconduct during the 2011 strike.

The two unions called their members back after two weeks of striking even though there was no agreement partly because union leaders saw how dug in Verizon had become and partly because they said Verizon had finally agreed to focus on the major issues in the negotiations.

Under the settlement, there is no raise for the first year of the contract, which has already passed, a 2.25 percent raise in the second year, 2.75 percent in the third year and 3 percent in the fourth year.

The two unions cited Gov. Andrew Cuomo of New York and George Cohen, director of the Federal Mediation and Conciliation Service, for their work over the last two months in helping to reach the deal.

This article has been revised to reflect the following correction:

Correction: September 19, 2012

An earlier version of this article gave Verizon’s net income in 2011 as $10.2 billion. The actual figure is $2.4 billion. The $10.2 billion figure includes  profits attributable to Vodafone, which owns a 45 percent share of Verizon Wireless.