Dr. Dre and Jimmy Iovine have been ordered by jury to pay former partner $25 million in royalties for Beats headphones
Dr. Dre and Jimmy Iovine have lost a lawsuit filed against them and have been ordered to pay $25 million in royalties to former partner Steven Lamar.
Dr. Dre and Beats Electronics co-founder Jimmy Iovine have lost a lawsuit filed against them by former business partner and hedge fund manager Steven Lamar, who claimed that the pair owed him over $100 million in royalties from the sales of Beats headphones over the years.
According to a report by Pitchfork, a Los Angeles Superior Court judge had initially dismissed the case on summary judgment, but that decision was reversed by a California appeals court in 2016, and the case went to trial earlier this month. A jury subsequently ruled against Dre and Iovine and ordered them to pay Lamar a sum totaling to $25,247,350.
In the lawsuit, Lamar had claimed that he went to Dr. Dre in 2006 'with the idea of celebrity-endorsed headphones.' According to the Hollywood Reporter, he had then brought along Robert Brunner, a renowned industrial designer, to help design and develop the headphones' design and brand. The complaint also states that because Dre and Iovine did not want to invest their own money in the venture, he had identified a manufacturer as well as investors for the project.
Dre and Iovine then separated from Lamar, filing a lawsuit that year that contended Lamar and associated companies had failed to perform under a contract and that they would come out with their own 'Beats' headphones. A settlement that followed saw an agreement where the pair would pay Lamar four percent in royalties from the sales.
But after Beats was bought out by Apple for $3 billion in 2014, the issue cropped up once again. The present litigation from Lamar, initially filed in 2016, saw the hedge fund manager alleging that they owed him royalties from the successive iterations of the headphones as well.
The lawyers of Dre and Iovine argued that when the initial royalty agreement was signed in 2007, the design for the headphones was still a work in progress and that it covered only the product they were working on at the time, adding that it was unclear whether the venture was going to succeed.
In rebuttal, Lamar provided proof that plans for future models had already been discussed, showcasing a powerpoint presentation from the year that appeared to discuss a noise-canceling model, a non-noise-canceling model, and a Bluetooth wireless model. In the most recently concluded trial, Dre and Iovine had testified that their involvement with the technology inside the headphones was minimal and that they primarily focused on the aesthetics and marketing aspects of the product.
In the end, the jury swung in Lamar's favor, ruling that the pair owed him the royalties from three models — $7 million for the Studio 2/Remastered headphones, $14 million for the Studio 2 Wireless headphones, and another $2 million for the Studio 3 headphones — which totaled up to the $25 million sum.