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Beats Headphones Royalty Dispute Saga Heads to Trial
Former hedge fund manager Steven Lamar, who helped launch Dr. Dre's Beats headphones a decade ago, won the right to go to trial against the rap artist and record producer after the California Court of Appeal revived his $100 million case over unpaid royalties.
Dr. Dre released the Beats line of headphones in 2008 with the launch of the Studio model. Apple Inc. bought Beats Electronics, the company behind the brand, for $3 billion in 2014. But lingering in the background has been litigation involving Steven Lamar that dates back to the origins of the best-selling headphones. California's Second District Court of Appeal recently revived Lamar's claims that Dr. Dre and record producer Jimmy Iovine, co-founders of Beats Electronics, owed him royalties on all 10 models of Beats headphones, not just the Studio. Jibe Audio LLC v. Beats Electronics LLC, B267633 (Sept. 19, 2016).
In 2006, Iovine and Dre sued Lamar and related companies, alleging breach of oral contract for manufacture, marketing, and distribution of the Beats headphones. The parties reached a global settlement in 2007. Lamar's current case originated when a design shop that was collecting royalties from Beats Electronics sought declaratory relief over the rights after Lamar began complaining he was owed payments. Lamar and his company, Jibe Audio, cross-sued Dr. Dre, Iovine, Beats Electronics and designer Robert Brunner, alleging the cross-defendants breached the 2007 settlement under which Lamar claims he was to receive 4% of every set of headphones sold. But Los Angeles Superior Court Judge Malcolm Mackey granted summary judgment after concluding that the written settlement agreement involved only the Studio.
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