Criminal Mind, The

Court Orders Martin Shkreli to Hand Over His Wu-Tang Clan Album (Again)

Top-secret until 2108, or something like that

You may remember Martin Shkreli, the “pharma bro” best known for buying a company so he could jack up the price of an AIDS-treatment pill from $13 to $750. He was also known for spending lots of money and time collecting unusual items (like a Nazi Enigma machine) and perfecting a carefully curated set of irritating facial expressions. See Niraj Chokshi, “Why is this ‘bro’ smiling? The many smirks of Martin Shkreli,” Washington Post (Feb. 4, 2016). Not surprisingly, it wasn’t long before there were signs that Martin Shkreli might be in some trouble (seeA Few Signs That Martin Shkreli Might Be in Some Trouble” (June 29, 2017)), and sure enough, he is now pretty well known for doing securities fraud.

Shkreli was sentenced to 84 months in prison for that, and also had to give up some of his most prized possessions. See Court Orders Martin Shkreli to Forfeit Smirk” (Mar. 6, 2018). The forfeited assets included the Wu-Tang Clan’s literally one-of-a-kind album, Once Upon a Time in Shaolin, only one copy of which was made and which Shkreli paid $2 million to buy. But having lost this unique asset along with his freedom, Martin Shkreli emerged from prison in May 2022 a wiser man who had learned the error of his ways and yes of course I’m being sarcastic. No, he immediately went on social media and announced that he still had a copy of the album he had been ordered to surrender.

He may now be in some trouble again.

To be clear about this album, the concept arose from Wu-Tang’s belief that “[t]he intrinsic value of music has been reduced to zero” by streaming and piracy (obviously not zero, but they have a point) and that it would have more value if treated as an “art object.” They wanted to try “adopting a 400-year-old Renaissance-style approach to music, offering it as a commissioned commodity” that would remain exclusive. They recorded the album in secret, made a single set of two CDs containing it, deleted the master files, and then, according to the purchase agreement (see below) auctioned off the following:

1) Two (2) compact discs containing the only existing copy of [the songs];

2) One (1) hand carved nickel-silver cased box (the ‘Box’) designed by the British-Moroccan artist Yahya Rouach;

3) One (1) 174-page volume containing lyrics, credits, and anecdotes on the production and recordings of each song…;

4) One (1) Certificate of Authenticity in a leather bound portfolio (on 600 gram hard paper with gold foil lettering and an official Wu-Tang Candlewax seal)…; [and]

5) One (1) customized pair of … speakers, including installation in Buyer’s chosen location (limited to UK or USA).

The five (5) missing hyphens were evidently to be supplied by the buyer (hereinafter not “Buyer”).

More to the point here, Wu-Tang agreed never to perform or re-record the music, and the buyer agreed to usage restrictions also meant to preserve exclusivity. Generally speaking, the agreement says the buyer can “duplicate or replicate the Work for private use,” use it for certain semi-private “Permitted Uses,” and/or sell the Work to a third party under the same conditions. All other uses are prohibited for 88 years. (The number 88 is said to be significant to Wu-Tang for some reason I don’t care enough about to look up.) This is all kind of ridiculous, but to be fair it did achieve the goal of convincing some rich idiot patron to pay millions of dollars for an album. But to Wu-Tang’s later embarrassment, that patron turned out to be Martin Shkreli, who by then had become widely loathed.

After Shkreli’s conviction, the government seized and auctioned some of his assets, including all the Wu-Tang stuff, to help satisfy the $7.4 million judgment against him. Notably, the forfeiture order also prohibited Shkreli from doing anything that might harm the value of this asset.

Arguably, that would include, let’s say, keeping copies of the music and playing it for a public audience during live-streaming events—which Shkreli allegedly did almost immediately after getting out of prison, admitting during these same events that he, in fact, made lots of copies, had already distributed some, and intended to keep on doing whatever he wanted with them. If Shkreli made the alleged statements, such as “LOL i have the mp3s you moron” and “[I] burned the album and sent it to, like, 50 different chicks,” those seem like pretty solid admissions.

None of this goes down very well with the current owner(s) of Once Upon a Time in Shaolin, an entity called “PleasrDAO” which bought it at auction. PleasrDAO filed an action against Shkreli in June, and Judge Pamela Chen granted a temporary restraining order on August 26. The order says Shkreli has to turn over any and all copies by Friday, identify anyone to whom he’s sold or given copies, and provide an accounting of any money he’s made doing this. Doesn’t necessarily mean PleasrDao will win, but obviously the judge thinks it’s shown that is likely.

Remarkably, the purchase agreement wasn’t all that clear (in my view) in defining what the buyer could and couldn’t do with the asset, even though the usage restrictions were, you know, kind of the point of the whole thing. (They seem to have been more concerned with getting all their definitions in there—i.e., “the Work”—than with making sure the definitions made sense.) But PleasrDAO isn’t claiming Shkreli breached the agreement, to which it wasn’t a party. It argues it has a third-party right to enforce the forfeiture order, that Shkreli’s infringing on a “trade secret,” and that he’s tortiously interfering with its economic interests in the top-secret artwork. Especially given Pharma Bro’s public acts and admissions, those seem like fairly solid claims.

This might be one of those cases where it’d be okay with me if nobody wins. PleasrDAO describes itself as “a collective of digital artists in the business of acquiring culturally significant pieces of art,” but arguably is more like a bunch of crypto/blockchain/NFT bros who have more money than sense (which also described Shkreli when he had money). A video posted by Forbes shows PleasrDAO’s CPO—it stands for “Chief Pleasing Officer”—talking about the purchase, and while he is obviously very happy about the whole thing, I wouldn’t say he is smirking about it.

That’s enough for me to give them the nod here.