Business News Legal

Court restarts legal battle between Beats and early collaborator

By | Published on Wednesday 21 September 2016

Beats by Dre

One of the lingering legal disputes linked to the Beats headphone-peddling business will return to court, after appeal judges overturned a ruling from last year that sided with the Beats company and its co-founders Dr Dre and Jimmy Iovine.

As previously reported, one time hedge-fund manager Steven Lamar claims that it was him who originally pitched the idea of celeb-endorsed headphones to then Universal exec Iovine in 2006, and that he also 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, and it’s that action that has been reinstated on appeal.

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 that seemed the right interpretation of the deal done between Dre, Iovine and Lamar.

The appeals court did not concur, reckoning that there is enough ambiguity in the agreement between Beats and Lamar for the matter to go before a jury. According to The Guardian, the judge observed: “Based on the extrinsic evidence presented and the language of the contract, we find that it is equally, if not more, plausible that the parties contemplated the interpretation for which Lamar advocates. There is no language in the contract limiting the agreement to a single model or product. Instead, the focus of the agreement is on the patented design on which the parties collaborated”.

So that’s fun. Still, at least it will give the Beats boys something to battle on, they having defeated legal claims by another early business partner, Noel Lee and Monster, last month.