Brands & Merch Business News

Beats sued by former By Dre partner

By | Published on Wednesday 7 January 2015

Beats

Another Beats lawsuit? Well, why the hell not. The now Apple subsidiary is facing another lawsuit from a former business partner (in addition to the one being pursued by Steven Lamar), this one from Monster LLC, the tech company that originally made the overpriced Beats By Dre headphones but which ended its alliance with the firm in 2012 in something of a messy divorce.

Though possibly more messy that we realised if the new lawsuit from Monster is to believed. According to the Wall Street Journal, it accuses the Dre and Jimmy Iovine headed Beats company of some dodgy dealing around its previous acquisition – by phone maker HTC in 2011 – which enabled the firm to call time on its Monster alliance.

Monster says that while Beats sold 51% of the business to HTC, it bought 25.5% back a month later (ultimately buying HTC out of the company entirely). The initial deal was done this way, says the lawsuit, so that Beats could utilise a change of ownership clause in its deal with Monster allowing it to cut its business partner out of the equation. As a result of the supposed change in ownership Monster says it had to transfer some of its IP over to Beats costing it millions in lost revenue.

To add insult to injury, Monster CEO Noel Lee, who retained a small stake in Beats even after his partnership with the firm ended, says he sold those shares in 2013 after being advised by a board member that no major transaction was on the horizon. Beats, of course, was then bought in a $3.2 billion deal by Apple last year, the latter of which said the purchase had been “years in the making”.

Lee also reckons Dre and Iovine have recently rewritten history editing out his company’s role in creating the hugely successful Beats headphone business. So, lots of grievances there then. Though the core legal claim is that Beats “fraudulently acquired” the Beats By Dre line of headphones through the allegedly “sham transaction” with HTC.

Neither Apple nor Beats have responded to the lawsuit.



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