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Monster Sues Beats, Says It Was Cut Out in 'Sham Transaction' With HTC

Image: Monster Sues Beats, Says It Was Cut Out in 'Sham Transaction' With HTC
Red Beats by Dre headphones are seen on display behind iPads and iPhones at the Apple Store on December 1, 2014 in Berlin, Germany. (Adam Berry/Getty Images)

By    |   Wednesday, 07 Jan 2015 01:01 PM

Monster sued Apple's recently acquired Beats Electronics, the maker of the popular Beats By Dr. Dre headphones, along with Taiwanese smartphone maker HTC on Tuesday for fraud.

According to The Wall Street Journal, Monster said in the filing that Beats used a "sham transaction" with HTC to fraudulently acquire the Beats by Dr. Dre line of headphones.

In specific, they allege Beats triggered a change-of-ownership clause in order to cut Monster out by selling a 51 percent stake in Beats for $300 million in 2011.

"The HTC deal required Monster to transfer all intellectual property to Beats, costing the company millions in lost revenue," wrote The Journal.

The suit states that less than a month after the deal closed, Beats repurchased 25.5 percent of its own shares from HTC.

Monster, known for making audio equipment, licensed and launched the headphone line in the summer of 2008, using platinum-selling rapper and hip hop producer Dr. Dre's popularity among teenagers to market the brand. Monster said it did the bulk of the work, developing, manufacturing, and distributing the headphones.

The suit claims further that Dr. Dre and business partner Jimmy Iovine "improperly erased" Monster and its founder Noel Lee's role in development of the headphones from Beats' history after the split.

Apple acquired Beats in 2014 for $3.2 billion, the company's largest acquisition ever, making Dr. Dre the richest man in hip hop.

212 2015-01-06 Monster Complaint



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Monster sued Apple's recently acquired Beats Electronics, the maker of the popular Beats By Dr. Dre headphones, along with Taiwanese smartphone maker HTC on Tuesday for fraud.
monster, sues, beats, fraud, htc
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2015-01-07
Wednesday, 07 Jan 2015 01:01 PM
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