Audio technology company Monster, which co-designed the original Beats by Dr Dre headphones, is suing Beats Electronics and its founders Dr Dre and Jimmy Iovine over allegations of fraud.
Monster CEO Noel Lee claims he and Monster invented the technology behind Beats by Dr Dre headphones and claims Iovine and Dr Dre committed fraud by pirating the technology from Monster.
Why the suit is happening only now is anybody’s guess but it comes just months after consumer tech giant Apple bought headphone maker and streaming platform Beats from Dr Dre and Iovine for US$3bn in May 2014. The deal consisted of an initial purchase price of US$2.6bn plus a further US$400m that will vest over time.
Apple plans to bundle the Beats music subscription service into iOS as part of an update to the operating system as early as March this year.
The sounds of litigation
Monster’s lawsuit, which has been filed in the Superior Court in San Mateo County, California, alleges Beats “fraudulently acquired” the line of headphones via a “change of control” clause after smartphone maker HTC acquired a 51pc stake in Beats in 2011.
“Had the partnership expired on its own terms, there would have been no transfer of Monster’s ‘Beats By Dr Dre’ product line, including all the development, engineering, manufacturing, marketing, distributing and retail rights.
“Defendant’s (sic) also absconded with Monster’s global distribution chain, key retail relationships, and intellectual property,” the Monster lawsuit documents allege.
The suit alleges that had Lee retained his 5pc stake in Beats he would have made US$100m from the acquisition of the headphones maker by Apple.
Beats by Dr Dre branding image via Shutterstock