3:27pm PT by Eriq Gardner
Apple Suing Headphones Entrepreneur for Claiming to Be a Beats Co-Founder
The story of how Beats Electronics was founded just got more interesting.
On Friday, the new Apple subsidiary filed a false advertising and unfair competition lawsuit against Steve Lamar for holding himself out to be a co-founder of the headphones company alongside Dr. Dre and Jimmy Iovine.
As we've been detailing since January, Lamar is involved in a separate dispute over whether Beats owes as much as 4 percent of royalties on newer headphone sales. In May, Lamar brought a cross-complaint that contended that in 2006, he took his concept for celebrity musical artist-endorsed headphones to Iovine, the co-founder of Interscope Records, and that the two worked with a design firm before the partnership crumbled.
When that happened nearly a decade ago, the parties went to court. Ultimately, a settlement was reached where Iovine and Dre agreed to pay a 4 percent royalty on certain headphones. Whether or not Lamar is owed for other so-called "covered headphones" is something being fought over in Los Angeles Superior Court.
Meanwhile, Lamar has apparently started a new headphones company called Roam and has been using his Beats history in the promotion.
Beats, now owned by Apple after a $3 billion acquisition, doesn't like the fact that Lamar is capitalizing on Beats' strong reputation with allegedly false and misleading claims about his association.
"Defendants’ claims are false and misleading because Lamar is not a 'co-founder' of Beats Electronics, LLC," states the complaint. "He does not have — nor has he ever had — any ownership interest in the company. Moreover, Jibe Audio [once run by Lamar] was not responsible for the 'concept, design, manufacturing and distribution' of Beats' headphones."
The lawsuit reports that third-party news organizations, tweeters and bloggers have been "inaccurately" referring to Lamar as a "co-founder," and that Lamar has "perpetuated these inaccuracies by tweeting direct links to these stories."
Beats points to statements on Roam's website and Lamar's social media profiles where he claims to have co-founded Beats, and the complaint faults the defendants for having "taken no steps to inform the public that these statements were incorrect."
Is calling someone a co-founder a factual statement? Is there liability for articles tweeted or statements re-tweeted? Keep listening. Beats, represented by David Walsh at Morrison & Foerster, demands Lamar be enjoined from making misleading statements about his role in the company, be ordered to remove statements made on social media sites, issue a public clarifying statement, and be ordered to pay the Apple subsidiary profits and treble damages.
Here's Roam's response:
"This lawsuit is filled with erroneous and unsubstantiated claims. Steven Lamar’s role and significant contribution as a creator of the Beats by Dr. Dre brand and its headphone product line have been acknowledged for nearly a decade. This is the reason for his agreement to receive royalty payments from Beats. Mr. Lamar does not claim to be a shareholder or employee in any 'Beats' related businesses established after he, Jimmy Iovine and Andre Young settled their dispute in 2007. We look forward to an immediate and positive resolution to this matter."