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Jury Decides Jimmy Iovine and Dr. Dre Owe Former Beats Partner $25 Million in Royalties

Beats Electronics cofounders Dr. Dre and Jimmy Iovine were hit with a $25 million verdict in favor of former business partner Steven Lamar in a Los Angeles Superior Court on Wednesday, according to reports in The Hollywood Reporter and other media outlets. In a 2016 lawsuit, Lamar and Jibe audio sought $100 million, alleging breach of contract over royalties for headphones’ original design.

An L.A. jury awarded Lamar  $25,247,350 after ruling the Dre and Iovine had not compensated him for design work he did on three headphone models; the pair had previously argued he was only owned royalties on one model, based on a 2007 agreement that specified only one model.

“We are pleased by this result for Mr. Lamar as it recognizes the key role he played in the origin of the world’s most recognizable headphones,” said Susman Godfrey partner Brian D. Melton, who served as lead trial counsel to Lamar. “We are thankful to the jury for providing this long-sought vindication for him.” 

An attorney and reps for Dre, Iovine and Beats did not immediately respond to Variety’s requests for comment.

In 2006, Dre’s lawyers filed a suit against Jibe, Lamar and the design firm Pentagram (of which co-designer Robert Brunner was a partner) and Lamar accusing them of failing to meet contractual agreements. In a 2007 settlement, Iovine and Dre agreed to pay a royalty on the basis of “4 percent base price of every headphone,” but only one headphone, Beats Studio, was specified.

The plaintiff argued that the design carried over to other models and the jury agreed, deciding on Wednesday that the original headphone’s characteristics had been used on later models with “minor cosmetic changes” and that Dre and Iovine should pay $25,247,350 in royalties on the Studio 2 Remastered, the Studio 2 Wireless and the Studio 3 models.

In his complaint, Lamar essentially argues that the idea for Beats by Dre was his: “In or about January 2006, Lamar introduced his concept for celebrity musical artist-endorsed headphones to Jimmy Iovine … [who] proposed that Dre be the celebrity musical artist. … Together, Lamar and Pentagram developed design and branding concepts including trademarks, logos, packaging and headphone product designs. In or about February 2006, Lamara and Pentagram presented their initial design and branding concepts to Iovine, Dre and others at Interscope.” It notes that around July 2006 “the business relationship between the involved parties soured,” and the settlement and mutual release agreement was reached in April of the following year.

Beats was founded by Dre and Iovine in 2006 as Beats by Dre and was sold to Apple Inc. in 2014 for $3 billion.

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