Thursday, June 28, 2018

Dr Dre and Jimmy Iovine ordered to pay $25 million to former Beats partner | UNLIMITED | CMU

Beats by Dre

A jury has ruled that the Beats headphones company – now an Apple subsidiary, of course – owes a former business partner $25.2 million in unpaid royalties. It brings to an end a long running legal squabble between Beats, its founders Dr Dre and Jimmy Iovine, and a business man called Steven Lamar.

No one disputes that Lamar was involved in the Beats By Dre business at the outset. Though no one can quite agree who first had the idea, back in 2006, of sticking Dre’s name on the side of some mediocre headphones and then hiking up the price, with both Lamar and Dre claiming they came up with that trick. But Lamar was definitely involved in pulling together the people who first put that plan into action.

However, that happy alliance soon fell apart and Lamar parted company with Dre and Iovine. Although not without an agreement that said that he and his other business partners would share in a 4% royalty on future sales of Beats headphones, in return for the work they’d done to get the business started.

The big dispute which was back in court this month was over quite what the royalty commitment in that 2007 contract related to. Which is to say was Lamar just due a royalty on the specific headphone product he contributed to, or on subsequent evolutions of that product as well? Lamar reckoned the latter and said he was due $100 million. And given Dre and Iovine later sold the Beats business to Apple for $3 billion, he suggested that that wasn’t too big an ask.

Having bounced around various courts, the dispute finally arrived in the LA Superior Court earlier this month where a jury was charged with the task of working out what that 2007 agreement said. In the end they decided that the royalty commitment related to three sets of Beats headphones, somewhat less than Lamar had hoped, but still enough to conclude that he was due another $25 million.

Although that’s not quite the payday Lamar had hoped for, his legal reps nevertheless welcomed yesterday’s ruling. Speaking outside the court, lawyer Stephen E Morrissey said: “The jury really validated our theory of the case, that Mr Lamar was involved in the founding of Beats. It’s not everything we were asking for, but we’re happy”.


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