Bose has reportedly sued Beats Electronics over patents related to its noise canceling headphones, according to a breaking news tweet by CNBC.
— CNBC (@CNBC) July 25, 2014
Of course, Beats is in the midst of being acquired by deep-pocketed Apple, making the company a much more attractive target for anyone who thinks they have a valid IP infringement claim than it ever was in years past. It’s unlikely that the company only recently started infringing on Bose’s IP – if it in fact has done so – or that Bose just noticed. More likely is that such a lawsuit never seemed worth the effort when Beats was making less than $1 billion per year and had little in the way of assets to go after. With Apple in the picture, however, things must look quite a bit different.
With more than $160 billion in cash on hand, Apple surely won’t be too concerned over this lawsuit – though history suggests that it will fight it voraciously. But the big loser in this case could be Beats’ former owners, including Jimmy Iovine and Andre “Dr. Dre” Young. With the Beats acquisition still pending regulatory approval, it’s still possible that the emergence of this lawsuit could be factored into the final sale price – maybe even robbing Dre of the crown of Hip Hop’s first billionaire.
There is limited information available at this time as to which patents exactly are involved in this case and how strong Bose’s infringement claims may be. Apple blog 9to5Mac outlines five patents that it feels could be relevant in this case, including those relating to “Dynamically configurable ANR filter block topology, “Dynamically configurable ANR signal processing topology,” “Method and apparatus for minimizing latency in digital signal processing systems,” “Digital high frequency phase compensation,” and “High frequency compensating.”
Beats has a bit of a history of, let’s call it “leveraging” other companies’ technology. The company has been accused by Monster, Inc. of acting in bad faith during the partnership that helped launch the Dre brand. The company has never been found guilty of any wrong-doing in court, but the nature of how it came by its early designs and technology is nothing if not mercenary.
Nonetheless, it’s unfair to speculate about the merit of Bose’s claims without more information. And given the slow-moving nature of these cases, it may be a while before we know exactly what to think here. We should, however, get insight into this case’s impact on the Beats acquisition in the coming weeks as the deal winds its way through regulatory clearance and Apple is forced to file with the SEC this material transaction.
Competitive as the two companies may be, instead of suing Beats, Bose may want to thank the popular urban brand for dramatically expanding the addressable market for luxury headphones. If the company views its product as “better,” something most audiophiles would agree with, then it should take the resources dedicated to this suit and direct them to updating its stodgy brand and winning a larger share of this newly-expanded market.
It’s also worth noting that Bose products are prominently featured in Apple stores and on Apple.com. With the Cupertino company serving as a mecca for affluent technology consumers, it could get quite expensive for Bose should the lawsuit lead Apple to decide to stop stocking its products.
It’s somewhat ironic given Apple’s ongoing tussles with Samsung over the Korean company’s copycat ways that it may soon find itself defending Beats for acting in similar fashion. But if Tim Cook and co. it’s that like “love and war,” all’s seemingly fair in hip hop and technology.