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Monster Sues Beats Over Headphone Tech

The suit alleges fraud in Beats' acquisition of the rights to Beats by Dre headphones.

Reuters / Yuya Shino

Audio equipment maker Monster has sued Beats Electronics, owned by Apple, over alleged “fraud and deceit” in the way that Beats acquired control of the rights to the popular Beats by Dre headphones.

Under a partnership formed in 2008, Monster and Beats developed Beats by Dre, a line of colorful, high-end headphones that vie with the likes of Skullcandy and Bose.

According to the suit filed in San Mateo (Calif.) County Superior Court on Tuesday, Monster engineered the success of the headphones and was unfairly cut out before Beats was sold to Apple last year.

The complaint names Beats co-founders Jimmy Iovine and Dr. Dre as well as HTC America Holdings, a unit of Taiwanese smartphone maker HTC, among others, as defendants.

Iovine is the co-founder of Interscope Records, a rap music pioneer that branched out to include acts like Lady Gaga and U2. Dr. Dre is a rapper and music producer.

According to the complaint, the defendants fraudulently acquired Monster’s Beats by Dre product line, including all development, engineering, manufacturing, marketing, distributing and retail rights, via a “sham” transaction with HTC, according to the complaint.

In 2011, HTC said it would buy a 51 percent stake in Beats for $309 million. Beats bought back half of HTC’s interest in the company soon after the transaction, the complaint said.

The complaint alleges the defendants used the change of control as an excuse to end Beats’ relationship with Monster in 2012, and that they had made millions off the work of Monster and its founder, Noel Lee. The suit alleges Iovine and Dr. Dre “improperly erased” Monster and Lee from Beats’ history.

Beats was not immediately available for comment.

The complaint did not mention a dollar amount in damages. It seeks general and special damages as well as punitive damages against Beats, HTC and the individuals named.

In May 2014, Apple bought Beats hoping to win points with the music industry and turn Beats Music into a strong competitor to Spotify and other streaming services.

(Reporting by Devika Krishna Kumar; Editing by Ryan Woo)

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