Monster Inc, the company that help co-design the original Beats by Dr. Dre headphones, is suing Beats Electronics along with cofounders Dr. Dre and Jimmy Iovine for allegedly stealing its headphone technology.
The company, known for its overpriced audio cables, filed a lawsuit this week in San Mateo California, claiming Beats and its founders screwed the it out of millions of dollars before the company was sold to Apple last year for $3 billion. According to court documents obtained by USA Today, Monster says Beats concealed its role in the designing and engineering the headphone line, as well as its part in the manufacturing, distributions and selling of the headphones.
Monster CEO Noel Lee originally retained a 5% stake in Beats that would have been worth more than $100 million when Apple acquired the company, but because Dre and Jimmy bought back the entirety of Beats in 2013 before the acquisition, Monster came away with nothing from the partnership.
Those transactions were a “sham” that Beats used to exercise its “change of control rights” to fraudulently get the headphones away from Monster, said Joseph Cotchett, an attorney with the Calif.-based law firm of Cotchett, Pitre & McCarthy, which is representing Monster. “Had the partnership expired on its own terms, there would have been no transfer of Monster’s years of work on Beats By Dr. Dre.”
After conspiring to get rid of Monster, Beats damaged Monster’s reputation in product development, claims the lawsuit which also lists HTC as one of the defendants. The power struggle to control Beats was documented last year in a thorough investigation by Gizmodo that revealed how Monster lost control of the $300 premium headphone market.
Cult of Mac reached out to Apple for comment, but the fruit giant has nothing to say about the lawsuit at this time.
Source: USA Today