The members of PleasrDAO are, well, pretty unhappy with Martin Shkreli.
The “Digital Autonomous Organization” purchased the legendary Wu-Tang Clan album “Once Upon a Time in Shaolin,” a one-off production, for $4.75 million. The album once belonged to Shkreli, who purchased it directly from the group for $2 million in 2015. However, Shkreli became a poster boy for the “pharma bros” price gouging in the pharmaceutical industry, getting into serious legal trouble and serving a seven-year prison sentence for securities fraud.
He also had to pay a $7.4 million fine in the case, and the government seized and sold Once Upon a Time in Shaolin to raise funds to pay the fine.
The album was truly “one of a kind,” a protest against the devaluation of music in the digital age, and a fascinating curio that quickly made its owners “interesting people.” The album was a two-CD set presented in a nickel-and-silver box engraved with the Wu-Tang Clan logo, and the full package included a pair of customized audio speakers and a 174-page leather-bound book containing lyrics and “production anecdotes.”
In a complicated transaction, PleasrDAO purchased the album from an unnamed intermediary, who had originally purchased it from the government. As part of that transaction, PleasrDAO created a non-fungible token (NFT, remember?) to represent ownership of the album. The New York Times provides a simple explanation of what this means:
To connect “Once Upon a Time” to the digital world, an NFT was created that acts as a certificate of ownership for the physical album, said Peter Schoolidge, a cryptocurrency and NFT lawyer who worked on the transaction. The 74 members of PleasrDAO will share collective ownership of the NFT certificate and thus own the album.
Making a copy…
But after purchasing the album and sharing collective ownership of its NFT, PleasrDAO realized that its “one-of-a-kind” object wasn’t as special as it thought.
In fact, Shkreli made copies of the music. A lot of copies. On June 30, 2022, PleasrDAO recorded a video of Shkreli playing music from the album on his YouTube channel, stating, “Of course I made MP3 copies. They’re like hidden in safes all over the world… I’m not stupid. I’m not gonna buy $2 million just to keep one copy.”
Shkreli began taunting members of PleasrDAO about the album, telling one member, “I listen to this album on Discord all the time, you idiot,” and claiming that PleasrDAO was concerned about the album being “owned by over 5,000 people.” Shkreli claimed in a 2024 podcast that he “burned the album and sent it to like 50 girls,” and said that this had a hugely positive effect on his sex life.
Shkreli even offered to send copies of the album to random internet commenters if they provided him with their “email addresses,” urged people to “beware of torrents,” and hosted a listening event for the album on his X account, which “potentially reached over 4,900 listeners.”
We know all these details because PleasrDAO sued Shkreli, alleging that he violated an asset forfeiture order and misappropriated “trade secrets” under New York state law.
PleasrDAO says Shkreli “knew that distributing copies of the album’s data and files and publicly playing it would diminish the marketability and value of the album.” The group is asking a federal court to block Shkreli’s actions and to obtain a list of all the people who distributed the album.
It’s not a secret
Shkreli’s response to all of this is essentially, “So what’s the problem?”
When he purchased the album for $2 million in 2015, Shkreli also acquired 50% of the album’s copyright. Before the album was seized by the government, Shkreli says he used his copyright ownership to make copies “as permitted by the original purchase agreement.” He says the government only seized individual physical copies of the album, and that Shkreli was entitled to keep any copies he had already made.
For trade secrets, a trade secret must actually be “secret.” Thanks to his own actions, Shkreli ensured that the album was not a secret. “Because Defendants lawfully purchased and shared the Works prior to the Forfeiture Order and Asset Purchase Agreement, the Works are no longer trade secrets,” Shkreli’s lawyers wrote in their defense.
Empire State Strikes Back
On August 26, 2024, a federal judge in Brooklyn issued a preliminary injunction (PDF) in the case as the parties prepare to litigate in court. The injunction prohibits Shkreli from “possessing, using, distributing, or selling any rights to Wu-Tang Clan’s album Once Upon a Time in Shaolin (the “Album”), including any data, files, or content of the Album.”
Additionally, Shkreli must “turn over to the defense any and all copies of the album or its contents in any form” and submit an affidavit stating that he “no longer has in his possession any copies of the album or its contents.”
Additionally, by the end of September 2024, Shkreli must provide a list of “the names and contact information of individuals to whom he distributed the data or files” and say whether he received any money from them.
