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Judge refuses to reconsider Beats co-founder royalty claim

By | Published on Friday 7 August 2015


A Californian judge earlier this week refused to reconsider one of the various bits of litigation that has surfaced in recent years around the big Beats venture.

This one was a lawsuit filed by a man who claimed to have originally pitched the idea of celeb-endorsed headphones to then Universal Music exec Jimmy Iovine, the idea out of which the entire Beats business grew.

As previously reported, one time hedge-fund manager Steven Lamar claims that, after pitching his idea to Iovine in 2006, and after the Universal man had brought Dr Dre into the venture, he put together a consortium of companies to make the project happen, including Pentagram which designed the initial product and a Chinese company who would handle manufacture.

But the whole venture quickly went legal, after Iovine and Dre accused the other partners in the project of failing to meet contractual commitments and of plotting to bring out their own Beats headphones without Dre’s involvement. That dispute was settled out of court the same year, with the early partners in the business – ie Pentagram and Lamar’s companies – being offered a 4% royalty payment on the sale of certain Beats headphones.

Disputes then arose around that settlement early last year, just as Apple was in talks to buy the headphone maker and its fledgling streaming service. The core dispute was exactly which Beats headphones the early business partners were due a royalty on, with Lamar arguing that he was due a cut on more product lines. There were also allegations that Pentagram and Beats had reached a separate agreement that cut him out of the picture. Either way, he reckoned he was owed a neat $150 million

But back in June the judge hearing the case sided with now Apple subsidiary Beats, ruling that his interpretation of the 2006 agreement limited Lamar’s royalty to just the earliest Beats headphones, and not subsequent product releases. But Lamar’s legal reps went back to court, citing certain legal technicalities as to why the judge should reconsider.

One key debate, according to Law 360, centred on comments made by the judge in June to the effect that he was lacking an expert opinion that could shed more light on the 2006 agreement. Lamar’s attorneys said that they now had such an expert whose opinion did not concur with the judge’s initial ruling. Lawyers for Beats then argued that lawyers for Lamar hadn’t included this argument in their papers prior to the latest hearing. So it was technicality on top of technicality really.

Either way, Beats won. Said the judge: “All I know is, I’ve made a decision on the case and the motion for reconsideration is denied. Good luck. I know you’ve done a lot of paper generating. I’m sorry, but that’s my decision”.