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Beats By Dre $100 million royalties dispute reaches LA Superior Court

By | Published on Monday 11 June 2018

Beats by Dre

A long-running legal battle over the origins of Beats By Dre headphones has reached the Los Angeles Superior Court. One time hedge-fund manager Steven Lamar claims that he is owed $100 million in royalties for his part in the development of the headphone line.

Lamar claims that it was him who originally pitched the idea of celeb-endorsed headphones to then Universal exec Jimmy Iovine in 2006. He also says that he pulled together the original consortium of companies to work on the design and manufacture of the initial Beats products.

Neither Dre nor Iovine deny Lamar’s involvement in the early days of the Beats project, but the partnership Lamar put together quickly fell apart, resulting in legal action. That dispute was settled out of court and, as part of the deal, Lamar was offered a 4% royalty payment on certain Beats headphones. But which Beats headphones, exactly? That question then resulted in new legal action in 2014.

The basic dispute is whether or not the 4% royalty only applied to original Beats products, or newer products derived from the originals. The Beats company – now an Apple subsidiary, of course – argues the former, and at first instance the judge agreed that this seemed the right interpretation of the deal done between Dre, Iovine and Lamar.

The case has been through various court proceedings – including being rejected entirely by one court. It was revived again in 2016, after a California appeals court ruled that the ambiguity of the royalty agreement meant that the case should be considered by a jury.

On Dre and Iovine’s side, they say that it was never expected that Beats would be the success it became. It was assumed that there would only ever be one pair of headphones, and this is what the deal with Lamar related to. However, Lamar’s legal team say they have evidence that there was always a plan to build a wider range of products.