Martin Shkreli must defend himself in court for alleged trade secret violations related to the Wu-Tang Clan’s super rare album.
Brooklyn U.S. District Judge Pamela K. Chen is with Pelerdao, a digital art collective that bought a unique album from the U.S. government in 2021 after Shkreli was part of a securities fraud judgment. The team sued Shkreli last year, accusing him of threatening to leak the album online, which they say would undermine its value.
Chen allows litigation to advance under federal trade secrets laws, a rare application of the regulation in music albums. “The secret and exclusive nature of the album is a large part of its intrinsic value,” Chen wrote. “There is no serious debate, the value of the album…is mainly based on its secret and exclusive nature.”
The judge acknowledged the legal novelty of the case and noted: “Although the court agrees with the plaintiff…it cannot be underestimated, the unique fact that the doctrine of trade secrets is applied to the case is uncharted territory.”
The Wu-Tang clan secretly recorded a time when Shaolin was pressed on a CD and wrapped in handmade silver and nickel boxes. It comes with a strict clause that prohibits public offerings until 2103. Shkreli bought the album for $2 million in 2015, and then he was called “Pharma Bro” because he exaggerated the price of life-saving AIDS drugs.
After his 2017 conviction, Shkreli was ordered to abandon the album to help meet the $7.4 million recovery order. Pelerdao purchased it from the government for $4 million in 2021, and then paid another $750,000 in 2024 to obtain the full copyright and related rights.
The group has since hosted private listening events and provided limited access to music. But in June 2024, Pelerdao filed a lawsuit after Shkreli hinted online that he might leak the track. They accused him of violating trade secret protection and violating the terms of confiscation.
Chen dismissed the breach of the forfeiture claim and ruled that only the government could enforce the agreement. But she allowed trade secrets and property proceeds claims to continue.
“Eliminating half of Pryordo’s case before discovery is an important step in our efforts to defend Mr. Skerely, who is not in line with his beliefs and we believe he is engaged in absolutely zero wrongdoing,” said Edward Andrew Paltzik, a lawyer for Skerely, in a statement on Friday.
Stephen Cooper, Puldo’s attorney, replied: “The judge made a thorough and thoughtful decision and we are pleased that we have fully and actively engaged in our lawsuit against Mr. Shkreli.”
Despite Pelerdao’s attempt to keep the album private, Shkreli admitted in court documents that he shared the music a few years ago.
“Because I shared musical works a few times a few years ago, I can’t remember every time I shared musical works,” he wrote. “It is possible, indeed, I’ll likely find that one of the many people who watched, heard or otherwise accessed musical works through my social media recorded the musical works and kept the same copy.”
