14 DAY TRIAL // Lawsuits are the bread and butter of lawyers. Quite a few of them were ready to pounce as soon as Monster launched its action against HTC and Beats. They would have been even if each of those companies didn't already have a team on retainers.
Legal spats are never fun and games, although one's sense of humor might see them as such, albeit in a sarcastic light, from outside.
Monster is hardly amused now, though. Indeed, it is quite incensed, having accused both Beats and HTC of fraud.
It might seem as though this came kind of out of nowhere, but that's not really the case. In fact, if things had progressed differently, Beats and Monster would be partners right now.
Monster's history with Beats and HTC
Back in 2008, Beats by Dr. Dre (though there were two main founders, Jimmy Iovine and Dr. Dre / Andre Young) teamed up with Monster.
Monster and Beats worked together to launch what is now known as the “Beats” line of audio products: headphones, earbuds, speakers, etc.
Then in 2011, HTC bought a 51% stake in Beats for the sum of $300 million / €250 million, triggering a change of ownership clause that forced Monster to transfer all its intellectual property to Beats.
This is what Monster has brought up, claiming that Beats and HTC conspired to trick it out of the deal with Beats.
How the fraud went from Monster's perspective
It might, perhaps, not have been such a big deal (albeit still one that cost Monster millions) if HTC's acquisition of Beats' majority share had been the end of the matter.
But it wasn't. Less than a month after the acquisition, which cost Monster the loss of all its idea, Beats brought 25.5% of its shares back from HTC, regaining majority.
After that, eight months after Apple acquired Beats, Monster's board members “misleadingly” said that no liquidity event was planned for the near future, which led it to sell off its remaining 1.25% stake in Beats. Only for this claim to be contradicted by Beats' Iovine and Apple SVP Eddy Cue in their public statement that revealed the buyout had been years in the making.
The odd part in this mess
Monster is not including Apple in the lawsuit against Monster and HTC for some reason. Also, Beats and HTC will no doubt make a strong case about all those being merely deals that went wrong, instead of the much more serious allegation of fraud.
Still, we can understand why Monster is upset with the situation. Those speakers, headphones, earbuds and other audio products selling by the millions are basically its inventions. Inventions which it's making no money off.