Scattershot legal blast from Beats 'cofounder' Steven Lamar reveals Apple is common thread in firm's

in General Discussion edited January 2015
In leveling claims against Beats, Dr. Dre, Jimmy Iovine and others over royalties, contract issues and similar breaches, former hedge-fund manager and founder of Jibe Audio Steven Lamar reveals a number of ways in which Apple was involved in the beginnings of the headphone maker.

According to the complaint, as first reported by The Hollywood Reporter, Lamar hatched the idea to create a headphone brand backed up by technology and promoted by a prominent artist.

In 2006, when President of SLS International, Lamar spoke with music label Insterscope Geffen A&M Record's chairman Jimmy Iovine about the concept, who suggested the brand be endorsed by Dr. Dre. Lamar and his audio company Jibe then brought on design firm Pentagram to create the headphone's uniquely modern aesthetic.

Pentagram was where Lamar, and by proxy Beats, would have first contact with someone associated with Apple. The Beats account was handled by Pentagram partner and renowned designer Robert Brunner, who served as Apple's Director of Industrial Design from 1989 to 1997. Brunner is known not only for his work, but for hiring Apple's current design chief Jony Ive.

In May 2006, Iovine introduced Lamar and one of the first Beats prototypes to Apple retail VP Jerry McDougal. According to the court document, McDougal was so impressed with the headphone that he put Lamar in touch with Don Inmon, who was responsible for product placement in Apple's retail stores.

At the time, it looked as though Apple would be one of the first Beats Headphones distributors, as Inmon assisted the company in creating specialized packaging suitable for display in brick-and-mortar Apple Stores. As some may recall, popular audio accessories company Monster was ultimately chosen to run distribution for Beats Headphones.

Under the deal, Iovine and Dre would retain ownership of the brand name "Beats by Dr. Dre" and receive a 20 percent royalty on gross sales. Lamar and Jibe would settle for a 5 percent royalty rate and an "equity interest" in Beats for "contributions to the business model, product concepts, brand identity, and iconic designs."

In that same year, Iovine and Dre filed a lawsuit claiming Lamar failed to uphold his end of the bargain and intended to introduce a line of Beats headphones without Dre's branding. A settlement was reached in 2007 which the Beats executives would pay four percent royalty rates on specific headphone models designed by Pentagram and sold by Monster. The terms stipulated that Pentagram and Lamar would split the incoming money.

From there, auditing firm Hinrichs & Associates -- now in control of Pentagram's rights -- leveled a lawsuit in January claiming Lamar was demanding royalties on derivative versions of Beats headphones.

The action brings us to Lamar's countersuit filed last Friday, which goes after not only Pentagram and Brunner, but Iovine, Dr. Dre and Beats. Lamar is suing all parties for breach of contract, breach of good faith, denial of contract, while other actions are being taken against Brunner and his new firm Ammunition over alleged interference with standing contracts.

Lamar's countersuit comes after rumors that Apple and Beats Electronics are working toward an acquisition deal that could be worth $3.2 billion. The discussions have attracted other legal claims including a $20 million suit leveled by David Hyman, founder and former CEO of streaming music service MOG, which was purchased by Beats in 2012.


  • Reply 1 of 16
    wizard69wizard69 Posts: 13,377member
    Maybe this is why things have been delayed.
  • Reply 2 of 16
    SpamSandwichSpamSandwich Posts: 33,407member
  • Reply 3 of 16
    phone-ui-guyphone-ui-guy Posts: 1,019member

    All that money is blood in the water to the music industry sharks. 

  • Reply 4 of 16
    suddenly newtonsuddenly newton Posts: 13,812member
    Sounds like another project for Aaron Sorkin and David Fincher.
  • Reply 5 of 16
    leavingthebiggleavingthebigg Posts: 1,291member
    If Apple has purchased Beats, remaining quiet is a good thing. Everybody who thinks they are owed money will now make themselves known. The patent trolls who would have never sued Beats are salivating at the chance to sue Apple.
  • Reply 6 of 16
    lightknightlightknight Posts: 2,312member
    I never really understood why Beats was so popular. They are far from the best on the market...

    It would however seem that all these people are sharks. Also, that ability to settle in the USA has some good sides, but it denies the truth the ability to come out.
  • Reply 7 of 16

    Is it me or does this article seem to come to a somewhat abrupt stop? It introduces the existence of another law suit without explaining anything about it. 

  • Reply 8 of 16
    maestro64maestro64 Posts: 5,042member
    Originally Posted by wizard69 View Post

    Maybe this is why things have been delayed.

    Yeah you are probably right, if this deal was coming close and Apple was looking under the covers and open door the skeletons began to fall out. Apple is not going to want to take on the legal issue he since it will cost more then if Beats settles it themselves. Then again Apple could set up the deal such that is will shielded from any lawsuits, They could buy them under one there LLC subsidiaries.

  • Reply 9 of 16
    elrothelroth Posts: 1,201member

    It sounds like Iovine and Dr. Dre want all their other partners gone, no matter how they get there. Maybe this is a warning to Apple about doing business with them.


    I can't see Apple going through with the purchase as long as these suits are pending, as they would beome Apple's responsibility.

  • Reply 10 of 16
    tallest skiltallest skil Posts: 43,388member
    Originally Posted by wizard69 View Post

    Maybe this is why things have been delayed.


    Sounds more like this is a response to the rumor.


    “What’s that? My work is being sold for $3.2 billion? Yes, I think I will sue to see some of that.”

  • Reply 11 of 16
    carthusiacarthusia Posts: 583member

    I haven't been keen on this rumored plan from the beginning. I also wouldn't trust Jimmy Iovine or maybe any music exec. Most seem to feel they're all sharks and liars. I'm sure Apple knows a lot about him, but I feel like they are being sold a bill of goods by Jimmy. I'm not sure what he's promising, but he's somehow turned a meager investment into $3.2bn?


    Also, for Apple's part, I've said it before and I'l say it again-Eddy Cue does not have what it takes to get done what they need done. They're basically paying billions of dollars to make up for Cue's lack of effectiveness. Their Internet Software and Services are improving, but not nearly fast enough. They are lacking in cohesion, I feel, because Eddy is unable to tie all the disparate strands together into a cohesive experience. That's what Jimmy is being paid out to do.


    Just my 2 cents.

  • Reply 12 of 16
    dysamoriadysamoria Posts: 3,430member
    Same old shit by wealthy and privileged corporate America. Does Dre realize he is a product name and nothing more to these people? Then we have the opportunistic lawsuits that show up when a brand suddenly looks to be making disgusting amounts of money (or be bought out for same).

    I wonder what Trent Reznor's thinking about all this BS. I wonder if he even knew about this crap waiting to bubble to the surface when he was installed as the "chief creative officer"...
  • Reply 13 of 16
    Why do I feel like I just played "6 degrees of Separation, the Apple/Beats Edition", after reading this? I need a flow chart.
  • Reply 14 of 16
    benjamin frostbenjamin frost Posts: 7,203member

    Originally Posted by lightknight View Post

    I never really understood why Beats was so popular. They are far from the best on the market...

    It would however seem that all these people are sharks. Also, that ability to settle in the USA has some good sides, but it denies the truth the ability to come out.

    Beats me, too.

  • Reply 15 of 16
    analogjackanalogjack Posts: 1,073member

    Dr Dre is a Vulcan and Iovine is a Martian with retractable antennae therefore neither are subject to Earth's patent laws.

  • Reply 16 of 16
    analogjackanalogjack Posts: 1,073member
    double post
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