Apple’s Beats Called Technology Pirate in Monster LawsuitJoel Rosenblatt
Beats Electronics, the headphone maker co-founded by rapper Dr. Dre and acquired last year by Apple Inc. for $3 billion, was sued over claims it betrayed its one-time partner and pirated Monster LLC’s engineering.
Dr. Dre and producer Jimmy Iovine started “Beats by Dr. Dre” in 2006 and introduced the first headphones in 2008 together with Monster. Three years later, just months before the partnership was set to expire, Beats used a sham transaction to abscond with Monster’s technology underlying the headphones, as well as its distribution chain, according to a complaint filed today in state court in Redwood City, California.
The lawsuit was filed by Noel Lee, manager of Monster, who started by experimenting with construction and materials of cables to improve audio sound quality. Lee worked closely to build “Beats by Dr. Dre” and Beats orchestrated a fraudulent “change of control” after HTC Corp. took a 51 percent stake in the company, according to the complaint, which also names HTC as a defendant. After severing ties with Monster, Beats sold the brand to Apple, Lee said.
Apple’s acquisition last year was its biggest-ever deal, giving the iPhone maker a popular line of headphones and helping bolster its music-streaming services in competition against Google Inc.’s YouTube, Spotify Ltd. and Pandora Media Inc.
Iovine, who was friendly with Apple co-founder Steve Jobs, and Dr. Dre, whose name is Andre Young, had struck partnerships with many musicians and athletes, including basketball all-star LeBron James, to market the company’s headphones.
“This is a tragic example of taking advantage of someone else’s idea and concept, running off with it, and throwing him under the bus,” Joe Cotchett, a lawyer for Lee, said in an interview.
Based on Lee’s 5 percent ownership of the company, damages could be $100 million, Cotchett said. Monster’s distribution that it turned over to Santa Monica, California-based Beats may be worth hundreds of millions of dollars, he said.
The complaint, which was provided by Cotchett’s law firm, couldn’t be independently verified in online court records.
Kristin Huguet, a spokeswoman for Cupertino, California-based Apple, declined to comment on the lawsuit.
HTC’s Taipei-based public relations officials didn’t immediately respond to an e-mail seeking comment.
The case is Monster LLC v. Beats Electronics, CIV 531991, California Superior Court, San Mateo County (Redwood City).