
Audio equipment maker Monster has filed a lawsuit against Apple owned Beats Electronics, in addition to its co-founders Jimmy Lovine and Dr. Dre, alleging that there was a conspiracy to keep the company out of the headphone deal with Apple.
The company has alleged that Beats worked in collusion with the smartphone maker to keep Monster out of the deal.
The lawsuit, filed at the Superior Court in San Mateo County, California accuses Beats of fraudulently acquiring the ‘Beats By Dr. Dre’ line of headphones through a "sham transaction" with HTC, reported the Wall Street Journal.
Monster is also taking action against HTC which bought a 51% stake in Beats for $300m in 2011.
Beats later repurchased 25.5% of the shares from HTC, which allowed the company to end ties with Monster due to a help of change-of-ownership clause.
According to Monster, it designed and engineered the headphone line in exchange for licensing rights to the Beats brand and celebrity marketing by Dr. Dre and Jimmy Lovine.
Monster had to transfer all intellectual property to Beats due to the change-of- ownership clause triggered by the HTC deal.
Lee said that Beats board members mislead him by claiming that no "liquidity event" was on the horizon for the next year or two.
Due to lack of transparency by Beats after the HTC deal, Monster CEO Noel Lee was said to have reduced his stake in Beats to 1.25%, from the previously owned 5% which would have been worth more than $100m after the Apple deal.