Beats and co-founders Dr. Dre and Jimmy Iovine weren’t playing fairly. At least, that’s what audio equipment maker Monster alleges in its recent lawsuit against the company.
Back in 2007, Monster and Beats teamed up to create “Beats by Dr. Dre,” a line of headphones and earphones that competes with the likes of Bose and Skullcandy. Four years later, HTC came in the picture and bought a majority stake in Beats, with the deal valued at around $300 million. In 2013, however, Beats decided to buy back HTC’s stake in the company, thus dissolving the partnership.
The problem here, according to Monster, is how Beats went about its acquisition by HTC. In hindsight, HTC’s majority stake purchase was only temporary, with the deal forcing Monster to sell its 5-percent stake in Beats. As previously mentioned, Beats bought its shares back from HTC, but at a discount, all the while having Monster’s knowledge about manufacturing and distribution.
According to Monster, this is an example of Beats’ “pattern and practice” to “lure entrepreneurs, musicians, and electronic product developers with promises of growing a business as partners.” Monster alleges that Beats kept the company in the dark, even though Monster CEO Noel Lee was assured any new investments could be refused, since he was a stakeholder.
Things didn’t end there, as the complaint states Beats attacked Monster in backroom dealings, which the audio equipment maker called “Monster-bashing.” This happened during the Consumer Electronics Show in 2012 and 2013, when Beats gave Monster’s distributors and retailers an ultimatum: either choose Beats or Monster as the product line.
Back in May of last year, Apple bought Beats to the tune of $3 billion, though shortly thereafter, Bose filed a lawsuit against Beats. That lawsuit has since been dismissed, though there’s no telling whether this lawsuit will be dismissed in the same fashion. You can read the complaint below.
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