Monster Sues Apple’s Beats and Its Founders Over Headphone Deal
Things always intrigue me when I look at the corporate world. There’s always something going on, which is good for our readers as we never run out of interesting stuff to report.
One such incident has taken place which involves tech giant Apple, Beats and its founders along with audio equipment maker Monster.
In one of such incidents, audio equipment maker Monster LLC has sued Apple’s Beats Electronics, its renowned founders Dr. Dre and Jimmy Lovine, and the smartphone maker HTC. The complaint alleges that all of the said parties tried to dupe Monster out of the headphone deal with Beats, before the company was sold to Apple last year, for $3.2 billion.
According to the lawsuit filed in the superior court of San Mateo county California, Monster said that Beats “fraudulently acquired” the Dr. Dre line of headphones through a “sham transaction” with Taiwanese phone maker HTC — which, back in 2011, agreed to buy a %51 stake in Beats for $300 million.
In the suit, Monster claims that Beats repurchased %25.5 of their own shares from HTC, little less than a month after the deal took place.
This allowed Beats to end their relationship with Monster, due to a change in ownership clause. Monster co-designed the original ‘Beats By Dr. Dre’ and helped the company launch the high-end line of headphones.
Monster claims they developed, manufactured and distributed this line of headphones. They agreed to do this in exchange for the licensing rights to Beats brand along with celebrity marketing by Dre (Andre Young) and Lovine.
Monster further stated that the deal between Beats and HTC, which later triggered the change of ownership clause, required all of Monster’s intellectual property to be transferred to Beats — which caused them a loss of millions in revenue.
Concerned about the transparency at Beats, Monster CEO Noel Lee, reduced his stake in Beats from %5 to only $1.25. In September 2013, Mr. Lee sold rest of his Beats shares, which he claims was due to him being misled by a board member, who assured him that no “monetary event” was coming in the next year or so. This was just 8 months before Apple acquired Beats.
However, at a technology conference later on, Apple’s Eddy Cue and Jimmy Lovine from Beats, said the deal between these two companies was several years in the making.
From the looks of it, Monster has a strong case if their claims are true. We’ll update you as soon as the story develops.