Hollywood Docket: Dr. Dre Goes to Trial in $100 Million Beats Headphone Royalties Case

A roundup of entertainment law news including Viacom getting a First Amendment victory in a lawsuit brought by Jayceon Taylor, the rapper known as The Game.
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A trial is now underway in Los Angeles Superior Court that explores the genesis of high-end Beats headphones and the dealmaking that allegedly left entrepreneur Steven Lamar out of more than $100 million in royalties.

Lamar is suing Andre "Dr. Dre" Young, Jimmy Iovine, and Beats Electronics. Lamar alleges being the one back in 2006 to propose to Dre and Iovine a line of celebrity-endorsed headphones based on a design by Robert Brunner, a renowned industrial designer.

But the parties had a falling out in the early years, and Dre and Iovine sued Lamar for breaching contract. This prior lawsuit then led to a settlement where Lamar relinquished rights in exchange for a four percent royalty on every headphone sold by Monster and its affiliates. After the settlement, Beats released new headphone models and began paying a two percent royalty to Brunner until sometime in 2014, when Beats bought out Brunner's interest. Dre and Iovine would later sell Beats to Apple for $3 billion.

The big question in the case is whether Lamar is due royalties for the later derivative versions of Beats headphones or whether the defendants fulfilled its obligations by merely paying him for the first headphone model.

The trial judge initially rejected Lamar's claims, but in Sept. 2016, a California appeals court revived the lawsuit by finding that the royalty agreement was "ambiguous" enough that a jury must consider the factual conflict about the interpretation of the contract. And so the parties are now at trial presenting evidence about whether the royalty agreement was meant to be a one-product deal or more. Dre and Iovine say that when the deal was made, nobody knew that Beats would be such a success where there would be follow-up versions, but Lamar points to a PowerPoint presentation from the early days where he contemplated different models and the parties' future collaboration on a "line of headphones."

In other entertainment law news:

—Viacom has prevailed against Jayceon Taylor, the rapper known as The Game, who facing a $7.1 million jury verdict for sexually assaulting a contestant on the VH1 reality show She's Got Game, turned around and sued Viacom for allegedly not protecting him against this woman. In a $20 million negligence lawsuit, Taylor asserted that Viacom should have done a more rigorous background check and discovered the woman's arrest history and more and determined she wasn't suitable to be on the show. On Tuesday, U.S. District Court Judge Dolly Gee granted Viacom's motion to strike by finding that Viacom's casting was an exercise of its constitutional free speech rights and that Taylor hadn't made a showing of a likelihood of prevailing on claims. Here's the judge's order.

—Amy Nobile and Trisha Ashworth, best-selling authors on the topic of motherhood, are suing producer Suzanne Todd over the film, Bad Moms, which stars Mila Kunis and Kristen Bell and grossed more than $180 million worldwide in theaters. The plaintiffs say they discussed with Todd collaboration on film and television projects and disclosed to her their ideas, research and insights. They say that Bad Moms includes substantial themes, sequences, character sketches and plotlines form their books and private research and ideas. They now allege Todd as breached an oral joint venture agreement and committed fraud, among other claims. Here's the complaint.

—The 2nd Circuit Court of Appeals has revived a copyright case over Justin Timberlake's song, "Suit & Tie." That recording samples "Sho' Nuff," by John Wilson, Charles Still, and Terrance Stubbs, who were once members of the group, Sly Slick & Wicked. These three individuals assert rights to "Sho' Nuff" and have gone to court against Dynatone Publishing Company, UMG Recordings, and Unichappel Music. The defendants argued that the song was a work-for-hire and that the statute of limitations had expired on plaintiff's ownership claims. A federal judge agreed on the latter point, but the appeals court reversed the decision. In the opinion (read here), the 2nd Circuit emphasizes the renewal period of the copyright term and says that the initial registration wasn't sufficient notice to Wilson, Still and Stubbs that the clock had begun to tick on their ownership claims.