PleasrDAO members are, well, pretty thehappy with Martin Shkreli.
The “digital autonomous organization” spent $4.75 million to buy the legendary Wu-Tang Clan album Once upon a time in Shaolinwhich was only produced as a single copy. The album once belonged to Shkreli, who bought it directly from the Wu-Tang Clan in 2015 for $2 million. But after becoming the “Pharma Bros” poster child for price gouging in the drug sector, Shkreli got into serious legal trouble and served a seven-year prison sentence for securities fraud.
He also had to pay a fine of $7.4 million in this case, and the government seized and sold Once upon a time in Shaolin to help pay the bill.
The album was truly “one of a kind,” a protest against the devaluation of music in the digital age, and a fascinating curiosity that instantly made its owners “interesting people.” The album came as a two-CD set in a nickel and silver box bearing the Wu-Tang logo, and the complete package included a pair of custom-made speakers and a 174-page leather book with song lyrics and “production anecdotes.”
In a complicated transaction, PleasrDAO bought the album from an unnamed intermediary who had initially purchased it from the government. As part of that deal, PleasrDAO created a non-fungible token (NFT – remember those?) to prove ownership of the album. The New York Times has a good description of what this entailed:
To connect “Once Upon a Time” to the digital world, an NFT was created that serves as a deed of ownership for the physical album, said Peter Scoolidge, a lawyer specializing in cryptocurrency and NFT businesses who was involved in the transaction. PleasrDAO's 74 members… share collective ownership of the NFT deed and thus own the album.
Make copies…
But after PleasrDAO purchased the album and shared collective ownership of its NFT, the company discovered that its “unique” item wasn’t quite as exclusive as it had thought.
Shkreli had actually made copies of the music. Lots of copies. On June 30, 2022, PleasrDAO said that Shkreli played 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 buying anything for two million dollars just so I can keep a copy.”
Shkreli began taunting PleasrDAO members about the album, telling one of them, “I literally play it on my Discord all the time, you're an idiot.” He also claimed that PleasrDAO was worried about an album that “>5000 people have.” Shkreli claimed in a 2024 podcast that he “burned the album and sent it to like 50 different girls” – and that it had been extremely good for his sex life.
Shkreli even offered to send copies of the album to random internet commenters if they just sent him their “email address.” He also told people to “look for a torrent” and hosted listening parties for the album on his X account, reaching “potentially over 4,900 listeners.”
We know all these details because PleasrDAO sued Shkreli, claiming he is violating the asset seizure order and misappropriating “trade secrets” under New York law.
Shkreli “knew that his actions would diminish the marketability and value of the album if he distributed copies of the album's data and files or played it publicly,” PleasrDAO said. They have asked a federal judge to stop Shkreli – and also to get them a list of everyone he distributed the album to.
No secret
Shkreli's response to all this is essentially: “So what's the problem?”
When he bought the album for $2 million in 2015, he also acquired 50 percent of the copyright to the package. Before the album was seized by the government, Shkreli exploited his copyright to make copies, as he was “allowed to do under his original purchase agreement.” The government, he says, seized only the single, physical copy of the album, and Shkreli had the right to keep the copies he had already made.
And as for trade secrets, well, a trade secret must be truly “secret.” Thanks to his own actions, Shkreli has ensured that the album not a secret. “Since the defendant legally purchased and transferred the work before the confiscation order and the purchase contract, the work is no longer a trade secret,” his lawyers wrote in his defense.
The Empire State strikes back
On August 26, 2024, a federal judge in Brooklyn issued a temporary restraining order (PDF) in the case as the two parties prepare to fight it out in court. The restraining order prohibits Shkreli from “possessing, using, distributing, or selling any interest in the Wu-Tang Clan album 'Once Upon a Time in Shaolin' (the 'Album'), including its data and files, or the contents of the Album.”
In addition, Shkreli must “turn over to the defense all copies of the album or its contents, in whatever form.” He must also provide a sworn statement that he “no longer possesses any copies of the album or its contents, in whatever form.”
By the end of September 2024, Shkreli must also provide a list of “the names and contact information of the people to whom he shared the data and files” and indicate whether he earned money for doing so.