Noel Lee, CEO of Monster, filed in a lawsuit in San Mateo (California) County Superior Court on Beats Electronics. Iovine, Interscope Records co-founder, a pioneer of rap music, and Dr Dre ,a music producer and a rapper, are co-founders of Beats. The two have allegedly conspired to brush aside Monster, the audio tech company which designed and created the high-end, colorful headphones “Beats By Dr. Dre” to acquire total control over the product line. Monster accused Beats Electronics of committing “corporate betrayal”. The two companies established themselves as partners in 2008 with the launch of the popular headphones.
According to Noel Lee the whole process started in 2011. 51 percent share of the firm was sold to HTC. He stated that development and research, distribution information and marketing, part of Monster’s intellectual property, were handed to HTC, a Taiwanese smartphone manufacturer. The share was later retaken from HTC. Afterwards, Beats convinced Lee to sell his stake. Beats Electronics is accused of committing fraud and deceit because Apple bought the company last year in May in a transaction worth $3 billion. Apple made this move in an effort to transform Beats Music into a challenger to Spotify and other streaming services. Lee’s 5 percent stake would have been worth around $100 million. The statement was made at the Consumer Electronics Show 2015 in Las Vegas.
Alleges from the suit said that Beats executives “made millions off the work of Lee and Monster.” The complaint also said that Monster lost millions of dollars since Beats “misappropriated the ‘Beats By Dr. Dre” manufacturing, distribution channels and technology. Up until now Beats has not released a comment. Apple refused any comment on the lawsuit too.
The NPD Group said that premium products like the “Beats By Dr. Dre” headphone lineup has about 60 percent of the premium U.S. headphone market, one that summed up a total of around $1 billion in the last year. Noel Lee claimed that Beats sought to eliminate Monster’s participation in the appearance of “Beats By Dr. Dre”. Ben Arnold, NPD analyst, told that this could be a move to aid Monster “gain market share”.
Image Source: USA Today