Apple-owned Beats Electronics is facing legal action after one of the co-designers of its original line of headphones accused the firm of fraud.
Noel Lee, CEO of audio technology firm Monster, has filed a complaint with the Superior Court in California against Beats suggesting he invented the technology used inside the headphone brand.
Monster assisted Beats co-founders Dr. Dre and Jimmy Iovine with the company's launch in 2008, and Lee claims he helped create and engineer the technology in exchange for licensing rights to the high-profile brand.
He also claims that Dr. Dre, along with fellow Beats co-founder Jimmy Iovine, failed to credit him for the contributions he made, and the effort he put into educating the pair about how best to make and distribute the technology.
However, when Beats sold a 50.1 per cent stake in its business to HTC in August 2011 for $300m, Monster claims it was made to forfeit its rights over the Beats technology because of a change of ownership clause shortly after.
This meant Monster had to hand over the intellectual property rights to the technology. This, it is claimed, cost his company millions in lost revenue.
According to a report in the Wall Street Journal, the move also prompted Lee to cut his five per cent share in the company to 1.25 per cent before selling the remainder eight months before Apple agreed to buy Beats in September 2013.
In the suit, Lee claims he only sold his shares after being assured by a member of the Beats board that there were no plans to sell the company or launch an initial public offering within the coming years.
Lee maintains in the suit that if he had retained his five per cent share in the company, it would have been worth more than $100 million now.
As recompense, Lee is seeking general, special and punitive damages against Beats , HTC and Dr. Dre and Jimmy Iovine individually.
Neither Apple or Beats have commented on the suit.
