Beats Electronics, bought last year by Apple Inc. for about $3 billion, was sued Tuesday along with Dr. Dre and Jimmy Iovine by audio components firm Monster and its chief executive, alleging fraud.
Monster CEO Noel Lee alleges Iovine and Dre (whose real name is Andre Young) “improperly took control” of Beats through a “sham” transaction at the end of a partnership between Monster and Beats that had created the world’s most famous headphones brand.
Apple could not immediately be reached for comment.
Monster, which makes thick, expensive audio system cables and other electronic goods, entered into a partnership with Dre and Iovine in 2008.
The suit, filed in San Mateo County Superior Court, says that just months before the partnership was set to expire in 2011, the agreement was “improperly terminated” through a “change in control” contract provision, when smartphone maker HTC bought 51% of Beats.
The suit alleges the sale was fraudulent and a sham intended to shift ownership of Beats to Dre and Iovine. HTC later sold its shares back to Beats.
Furthermore, the suit alleges that Dre’s “primary contribution” to the creation of Beats “was to bless Monster’s headphones.”
Monster and Lee are no strangers in the courts or at the halls of the United States Patent and Trademark Office.
The company has filed numerous lawsuits and complaints challenging other uses of the word “Monster,” including the Disney franchise Monsters, Inc. and the nickname of the Chicago Bears football team — the Monsters of the Midway, a nickname in use at least since 1940. Many of Monster’s claims have gone nowhere or have been settled out of court.
Dre and Iovine have faced other challenges to their ownership claims. Early last year, Steven Lamar, a former hedge fund manager and founder of Jibe Audio, filed a breach-of-contract suit against the pair in Los Angeles, alleging he was not only a Beats co-founder but the “father of Beats headphones” and that it was he who first took the Beats concept to Iovine in 2006.
And in October, Bose and Beats settled a patent lawsuit after Bose alleged that Beats violated noise-cancellation patents.