Apple's Beats Electronics is facing a lawsuit filed from Monster, who alleges that the former conspired to take the headphone sector from the latter before Apple acquired Beats in 2014 for $3.2 billion.
Monster filed its complaint on Jan. 6, Tuesday, at the San Mateo County's Superior Court. It alleges that Beats "fraudulently acquired" the headphone line, which was co-developed with Monster, with a "change of control" clause during HTC's 51 percent stake acquisition in Beats, co-founded by Dr. Dre and Jimmy Iovine.
According to the complaint, the headphone line would not have been transferred if the partnership "expired on its own terms."
According to CNET, Apple's acquisition of Beats is its largest to date.
Monster CEO and plaintiff Noel Lee claims that he was forced to decrease his 5 percent share down to 1.25 percent in the firm in 2012 due to transparency issues regarding the HTC deal. He was also persuaded to sell the remaining percentage back to Beats for only $5.5 million.
The punitive damages sought by the plaintiffs could reach up to $100 million, according to Lee's lawyer Joe Cotchett, Bloomberg reported.
The Cupertino based firm's spokeswoman Kristin Huguet declined to give a comment to Bloomberg regarding the Monster LLC v. Beats Electronics case.
Beats was first set up in 2008 by Iovine and Dre and is popular for overly-hyped headphones that are also widely criticized for its high price. Its earbud line of products costs around $99, while its pro0grade headphones can cost up to $450.