Audio-equipment maker Monster launched a lawsuit against Apple-owned Beats Electronics and the Taiwanese smartphone manufacturer HTC over alleged “fraud and deceit”.
Monster and Beats teamed-up in 2008 and developed the “Beats by Dr. Dre” brand, a line of high-priced, high-tech audio devices. The Beats products have enjoyed high demand from teenagers and celebrities ever since.
The lawsuit, filled by Monsters CEO Noel Lee in Superior Court in San Mateo County, California on Tuesday, names HTC America Holding, Beats co-founder Dr. Dre and Jimmy Iovine among others as defendants.
According to the filling Monster was the main contributor to the headphones engineering and the defendants tried to erase any trace of Monster involvement in Beats success, after the two companies parted ways.
The complaint also claims that Dr. Dre and Jimmy Iovine used a “sham” transaction with HTC in order to acquire the Beats brand.
In 2011 HTC agreed to buy a 51% stake in Beats for $300 million, however, the lawsuit claims that in less than a month Beats bough back 25.5% of its own shares from the American unit of HTC.
The move empowered Beats and allowed it to end the partnership with Monster thanks to a change-of-ownership clause, which forced Monster to handover all intellectual property to Beats.
Mr. Lee reduced his stake in Beats from 5% to 1.25%, after the deal with HTC closed, citing lack of transparency around the agreement. In September 2013, ahead of Apples $3.2 billion acquisition in May, Mr. Lee sold the rest of its shares after he was allegedly misinformed by a board member that there was no planned sale during the next year.
However, the filling claims that Mr. Iovine and Apple Senior Vice President Eddy Cue announced at a technology conference that they have been in talks over a possible sale of Beats for several years.
“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, cited by Bloomberg.
According to the filling, Mr. Lees 5% stake in Beats could be valued at more than $100 million.
Apple gained 0.01% on Tuesday and closed at $106.26 on NASDAQ, marking a one-year increase of 36.75%. The company is valued at $623.14 billion. In pre-market trading on Wednesday the stock edged up 0.90% to $107.22 at 13:28 GMT.
According to the Financial Times, the 42 analysts offering 12-month price targets for Apple Inc. have a median target of $122.00, with a high estimate of $150.00 and a low estimate of $60.00. The median estimate represents a 14.81% increase from the last close price.
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