Monster LLC, an audio-equipment manufacturer, announced that Apple Inc (AAPL) has rescinded Monster’s authority to manufacture licensed accessories downloadable in Apple devices, and described Apple as “a bully,” news said. The revocation came after it was reported that Monster, together with its Chief Executive Officer Noel Lee, filed a lawsuit in January against Apple Inc’s Beats Electronics LLC.
David Tognotti, Monster’s general lawyer, said the revocation “shows a side of Apple that consumers don’t see very often. Apple can be a bully.”
In a report from Wall Street Journal, Apple’s chief litigation lawyer Norreen Krall told Tognotti that effective May 5, their agreement was deemed terminated. The reason given was that their business relationship was no longer “mutually beneficial.”
Tognotti added that Krall elaborated the lawsuit will injure the “working relationship” between Monster and Apple. He also attempted to reconcile their business relationship by pointing out that the revocation will disturb Monster’s business and for many years, Apple and Monster have been good partners.
Since 2008, Monster has paid Apple $12 million for the licenses fees. With the latest news, Monster can sell licensed accessories until September, however, Monster can no longer develop new ones.
Monster claimed the revocation was Apple’s requital for the lawsuit which Monster filed earlier against Beats Electronics alleging the latter betrayed Monster and pirated its engineering department. In the complaint, Monster and Lee charged Beat along with co-founders rapper Dr. Dre and Jimmy Iovine of cheating Monster on “potential proceeds from the company’s sale to Apple.”
Monster asseverates that Beats procured by fraud “the Beats by Dr. Dre line of headphones” from a business agreement with HTC Corporation, which in 2011 assented to buy 51 percent of Beats’ stake for $300 million.
The complaint further said that Beats reacquired 25.5 percent from HTC its shares weeks after the deal was sealed, enabling Beats to cease its connection with Monster under the “change of ownership” clause. This said clause required Monster a transfer of all intellectual property rights to Beats at the expense of lost revenues by Monster.
Tognotti pointed out that Apple’s reaction was exuberant because Monster did not sue Apple directly. Rather, Apple inherited the suit when it purchased Beats in 2014 for $3.2 billion.