The business world can be quite cutthroat at times. We hear all the time about someone suing someone else over a business transaction gone afoul. This is especially true in the technology realm where patents and such come into play. Music industry heavyweights, Dr. Dre and Jimmy Iovine have found themselves in such a predicament over their Beats Electronics empire, which Apple recently acquired for $3 billion, the biggest acquisition in the history of Apple. A former partner is suing Beats for pirating technology from Monster, LLC.
Dr. Dre and Iovine started “Beats by Dre” in 2006, releasing the headphones in conjunction with Monster in 2008. According to a complaint filed, three years later (about three months before the Beats/Monster partnership was to end), Beats Electronics used a “sham transaction” to usurp Monster’s technology used in the headphones and its distribution chain.
Noel Lee, manager of Monster, filed the lawsuit. He is, reportedly, the one who was tinkering with the construction of the headphones, experimenting with various materials and processes involving the cables to improve the sound quality of the headphones. According to the Bloomberg Report, “Lee worked closely to build ‘Beats by Dr. Dre’ and Beats orchestrated a fraudulent ‘change of control’ after HTC Corp. (2498) took a 51 percent stake in the company, according to the complaint, which also names HTC as a defendant.” Lee says Beats Electronic made their deal with Apple after severing ties with Monster.
Lee could potentially be awarded upwards of $100 million based on his 5% ownership stake in Beats Electronics. Lee’s lawyer, Joe Cotchett said, “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.”