Dr. Dre, Jimmy Iovine Hit With $25M Verdict at Beats Trial

A jury in Los Angeles has handed down a $25 million verdict in favor of Steven Lamar, a former business partner of Beats co-founders Jimmy Iovine and Dr. Dre.

Lamar claimed credit for the idea of celebrity-endorsed headphones. In 2006, he took the idea to Dre and Iovine. The original Beats headphones were based on a design by Robert Brunner, a renowned industrial designer. The parties had a falling out, and a settlement was crafted.

In a 2014 lawsuit, Lamar alleged that Dre and Iovine had violated the settlement and owed him lucrative royalties from the sale of later Beats headphones. The case was initially dismissed by a judge, then revived by an appeals court. Eventually, it went to trial.

Iovine and Dre argued that Lamar was only entitled to royalties from the first headphone model -- the Beats Studio make -- leading to a controversy over whether the settlement amounted to a one-product deal or was inclusive of the celebrity-endorsed line of headphones that was later released.

A jury on Wednesday decided that Lamar had fulfilled his contract and that the defendants should pay him royalties on the sales of three Beats headphone models, the Studio 2 Remastered, the Studio 2 Wireless and the Studio 3, to the tune of $25,247,350.

Lamar had been seeking more than $100 million in royalties.

The trial featured testimony from both Iovine and Dre about the origins of Beats, which sold to Apple for some $3 billion shortly before Lamar filed his lawsuit.

Dre credited Brunner with much of the work and said he couldn't remember Lamar at a key meeting in 2006 discussing the future of Beats.

Lamar, who once ran a hedge fund, acknowledged that he had conveyed intellectual property rights, but insisted he was due royalties per contract. His attorney painted him as the true architect that had worked on the disparate elements — branding, technology, design, and manufacturing.

Ultimately, the jury agreed to give Lamar some of what he felt was owed. The plaintiff was represented by a team at  Susman Godfrey while Dre and Iovine were handled by Morrison & Foerster.