Dr Dre and Jimmy Iovine sued by Monster CEO Noel Lee over Beats headphones
Dr Dre and Jimmy Iovine are being sued by Noel Lee, a former business partner who co-designed their Beats headphone range.
Noel Lee, whose firm Monster helped launch Beats by Dr Dre in 2008, says his company was betrayed and its technology “pirated”.
He alleges he “lost millions” after Dr Dre and Jimmy Iovine “improperly took control” of Beats through a “sham” transaction.
After severing ties with Monster, Beats was purchased by Apple for $3 billion.
In legal papers filed in California, Noel Lee alleges rap producer Dr Dre was barely involved in creating the headphones that carried his name.
The range quickly became a highly desirable brand with celebrities and music fans, and Dr Dre’s endorsement was key to its success.
When the company was sold to mobile phone manufacturer HTC in 2012, Dr Dre and Jimmy Iovine made $100 million each, Forbes estimated.
However, Noel Lee claims the deal forced him to cut his share in the company from 5% to 1.25%. He says he then had no other option but to sell his remaining stake for $5.5 million near the end of 2013.
His legal case describes the HTC deal as “fraudulent” and “a sham” intended to shift ownership of Beats to Dr Dre and Jimmy Iovine.
HTC later sold its shares back to the Beats.
Noel Lee says if he’d still had his 1.25% stake, he would have received more than $30 million in the Apple deal.
His original 5% stake would have been worth around $150 million.
A statement from Monster’s law firm Cotchett, Pitre & McCarthy says that Dr Dre and Jimmy Iovine “made millions off the work of Monster and Lee, while the plaintiffs lost millions”.
There’s been no response yet from Dr Dre’s lawyer – or from Beats.
It’s the second lawsuit against the company since Apple bought it last year.
The first was brought by the Bose Corporation over patented technology for cancelling noise in earphones.
That case was settled under undisclosed terms in October.
Dr Dre and Jimmy Iovine are also being sued by David Hyman, who sold his music streaming service MOG to Beats in 2012.
That court case, filed shortly before the Apple deal was sealed, is taking place now in Los Angeles.
