50 Cent may only be worth half a buck after he pays $16 million to Sleek Audio over giving away its headphone designs to a competing company.
The basics behind the legal action stems from a business agreement between 50 Cent, whose real name is Curtis Jackson III, and Sleek Audio. The deal was to have Sleek produce an over-the-ear headphone line called Sleek by 50 based on ideas supplied by Jackson. However, when Sleek did not produce the headphones in a timely fashion, Jackson took the designs to SMS Audio, another headphone manufacturer
SMS has since been selling headphones called 50-Over.
In an interesting twist, Jackson is a partner in Sleek. He came on board when he loaned the company $285,000 in 2010 when the headphone deal was first brokered.
However, SMS Audio also lists Jackson as the majority owner of the brand being sold under his name by that company.
Last July, arbitrator William Needle ruled that Jackson breached confidentiality, gave away trade secrets and also broke a nondisclosure agreement with Sleek when he took the designs to SMS. The damages assessed in the case were based on three years of net profits earned by SMS. The break out has Sleek being paid $4.5 million in attorney fees and $11.7 million in damages.
Needle's decision was affirmed in March by the U.S. District Court in Miami.
Even though he ruled in favor of Sleek, Needle blamed its owners Mark and Mike Krywko for creating the situation.
He said the Krywkos particularly "did not have a good head for business" in partnering with Jackson. Needle's decision noted that the Krywkos saw Jackson's investment in the company as money to develop their ear buds, rather than the headphones Jackson wanted.
Jackson had filed a claim against the Krywkos saying he was mislead when he invested money into Sleek.