Rap royalties

Two of the most famous producers in the world have recently appeared in court for a case involving the iconic Beats headphones. Andre Young or “Dr Dre” as he is better known, testified with his friend Jimmy Iovine against their former business partner Steven Lamar who sued the two for $100 million dollars over royalties owed for the Beats headphone design.

The case hinged around a breach of contract between Lamar and the two producers who originally founded Beats headphones. Lamar originally came to the company and helped propose initial designs by Robert Brunner a famous industrial designer. Following an initial production run, a number of iterations followed and Lamar claims he is entitled to royalties on all of them whilst the two Beats founders claimed he is only entitled royalties on the first.

Lamar stated that a number of design changes were “cosmetic” such as the transition from a headband to ear cup and the location of the iconic “b” logo and these characteristic are shared by every make of the headphones. Deciding by a 9-3 margin, a jury in Los Angeles agreed with Lamar and awarded him $25.2 million in unpaid royalties – an amount which could still grow because of future headphone sales still out on the market.

This case clearly shows importance of reviewing contractual arrangements carefully and employing careful drafting to achieve the parties’ objectives. Many people can be involved in the creation of a commercially successful design and, as this case shows, not recording ownership rights of each appropriately can be costly.