Beats Electronics, one of Apple’s most high profile acquisitions, is now facing a lawsuit from rival audio firm Monster.
According to Monster, Beats’ cofounders Dr. Dre and Jimmy Iovine are guilty of fraud for stealing the Beats headphone design.
Beats’ original headphones were designed by Monster, but Monster claims Dre et al stole the designs and sold them in a ‘sham’ transaction to HTC.
Back in 2011, exactly 51 per cent of Beats Electronics were sold to HTC for $300 million.
Fast forward to 2013 and both Iovine and Dre had repurchased a controlling stake in Beats, changing ownership and cutting all ties with Monster.
Monster’s CEO Noel Lee reduced his stake in Beats to zero, just shy of a year before Apple picked up Beats for a hefty $3 billion – of which Monster saw exactly zilch.
Lee filed the suit with San Mateo County, California’s Superior Court, claiming millions of dollars invested in Beats were lost during the HTC sale.
If Lee had not dropped his stake from 5 per cent, to 1.5 per cent, and then to zero, he would have rights to $100 million worth of Beats shares following the Apple acquisition.
The Monster boss also claims Beats effectively hid his work on Beats, with the audio firm instead crediting Dre for the popular headphone design.
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Interestingly, Lee already spoke out about the Apple Beats takeover as it was proposed, and sounded fairly amicable, if not a little bitter.
“We are very excited for our friends at Beats to have achieved such an incredible valuation from the company Monster started,” said Lee, in a statement sent to TrustedReviews last March.
“For the first 5 years, until 2013, Monster was Beats, having developed engineered, and distrubted all of the Beats products.
How will that last bit fly in court, we wonder?
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Editorial independence means being able to give an unbiased verdict about a product or company, with the avoidance of conflicts of interest. To ensure this is possible, every member of the editorial staff follows a clear code of conduct.
Professional conduct
We also expect our journalists to follow clear ethical standards in their work. Our staff members must strive for honesty and accuracy in everything they do. We follow the IPSO Editors’ code of practice to underpin these standards.
