Dr Dre's Beats sued by Monster audio equipment maker over alleged fraud

Audio equipment maker Monster is suing Dr Dre's Beats headphone company, owned by Apple, over alleged "fraud and deceit" and says it was unfairly cut out of the company.

Filed in Northern California this week, the complaint alleges that Beats co-founders Dr Dre (Andre Young) and Jimmy Iovine concealed business dealings and slowly cut Monster and its CEO Noel Lee out of the company, before selling it to Apple last year for $3bn (£1.98bn).

It is alleged that Beats has a "pattern and practice" to "lure entrepreneurs, musicians and electronic product developers with promises of growing a business as partners," before changing direction and "squeezing" them out of the company - but only after they've taken intellectual property from them, the complaint says.

That is what Monster claimed happened when Beats signed a deal with phone maker HTC, which saw the Beats logo appear on a number of handsets to promote their improved audio quality. Monster says it was kept in the dark over the deal, despite Lee being assured he, as a stakeholder, could refuse new investments.

The complaint accuses Beats of fraudulently acquiring Monster's 'Beats by Dr Dre' product line - including all development engineering, manufacturing, marketing, distribution and retail rights - through a "sham" transaction with HTC. It is alleged that, in 2011, HTC said it would buy a 51% stake in Beats for $309 million, only for Beats to buy back half of that share soon after.

It is claimed Beats used the change of control as an excuse to end its relationship with Monster in 2012, pocketing millions of dollars for Young and Lovine in the process.

Monster-bashings

Worse still, the complaint goes on to accuse Beats of attacking Monster during backroom dealings, which it calls "Monster-bashings" and says occurred at the CES technology trade show in both 2012 and 2013. The confrontations eventually led to Beats staff threatening to remove products from display if they had to share shelf space with Monster.

The complaint does not request a specific amount of damages and Beats is refusing to comment.