Apple (AAPL.O) scored a victory on Wednesday when a U.S. appeals court paused a government commission’s import ban on some of the company’s popular smartwatches following a patent dispute with medical-technology firm Masimo (MASI.O). The tech giant had filed an emergency request asking the U.S. Court of Appeals for the Federal Circuit to halt the order after appealing the U.S. International Trade Commission’s (ITC) decision that it had infringed Masimo’s patents.
Quick Read
- Apple’s Victory in Patent Dispute: Apple won a temporary reprieve in a U.S. appeals court, pausing a government commission’s import ban on some of its smartwatches amid a patent dispute with medical-technology firm Masimo.
- Background of the Dispute: The U.S. International Trade Commission (ITC) had decided that Apple infringed on Masimo’s patents, leading to an import ban on Apple Watches with blood-oxygen level reading technology. Apple appealed this decision.
- Financial Implications and Public Relations Concerns: The final decision in this dispute could have significant financial implications for both companies. Analysts suggest that the potential financial impact on Apple might be overshadowed by negative publicity from the lawsuit.
- Market Reaction: Following the court’s decision, Masimo’s shares dropped by almost 4%, while Apple’s shares remained largely unchanged.
- Details of the Patent Infringement: Apple’s Series 6 smartwatches, introduced in 2020, include a pulse oximeter feature, which Masimo claims infringes on its technology. Masimo has accused Apple of stealing its pulse oximetry technology and incorporating it into the Apple Watches.
- Apple’s Counterclaims: Apple has countersued Masimo, alleging that Masimo’s legal actions are a strategic move to pave the way for its competing smartwatch.
- Appeals Court’s Temporary Halt: The appeals court temporarily halted the import ban while considering Apple’s motion for a longer pause during the appeal process. The ITC has until January 10 to respond to Apple’s request.
- Biden Administration’s Stance: The U.S. President Joe Biden’s administration declined to veto the ban, which allowed it to initially take effect.
- Apple’s Legal and Technical Strategies: Apple is exploring various legal and technical options, including whether redesigned versions of its watches infringe on Masimo’s patents, as determined by U.S. Customs and Border Protection.
- Sales of Apple Watches: Following the appeals court decision, Apple can temporarily continue selling its Series 9 and Ultra 2 smartwatches in the U.S. These models had been paused due to the ITC decision but were available at other retailers. Apple stores in New York reported uncertainty about when the watches would be back in stock.
- Impact on Other Apple Watch Models: The import ban did not affect the Apple Watch SE model, which lacks a pulse oximeter. Watches sold before the ban were also not affected.
- Previous Jury Trial: A jury trial in California federal court addressing Masimo’s allegations against Apple ended in a mistrial in May.
- Revenue from Apple’s Wearables: Apple’s wearables, home, and accessory business, which includes the Apple Watch, generated $8.28 billion in revenue during the third quarter of 2023.
Reuters has the story:
Apple wins bid to pause Apple Watch ban at US appeals court
Newslooks- Dec 27 (Reuters)
Apple (AAPL.O) scored a victory on Wednesday when a U.S. appeals court paused a government commission’s import ban on some of the company’s popular smartwatches following a patent dispute with medical-technology firm Masimo (MASI.O).
The tech giant had filed an emergency request asking the U.S. Court of Appeals for the Federal Circuit to halt the order after appealing the U.S. International Trade Commission’s (ITC) decision that it had infringed Masimo’s patents.
Masimo declined to comment on the court’s decision, while Apple did not immediately respond.
A final decision could cost either company millions of dollars and potentially force a settlement or some kind of technological workaround by Apple, analysts said. Ultimately, though, any financial hit for Apple is likely to be dwarfed by the bad publicity the lawsuit is generating, they said.
Masimo shares were down almost 4% following the decision, and Apple shares were largely flat.
The ITC barred imports and sales of Apple Watches with technology for reading blood-oxygen levels. Apple has included a pulse oximeter feature in its smartwatches starting with its Series 6 model in 2020.
Masimo has accused Apple of hiring away its employees, stealing its pulse oximetry technology and incorporating it into Apple Watches. Apple has countersued, calling Masimo’s legal actions a “maneuver to clear a path” for its own competing smartwatch.
“Apple can easily develop their own blood monitoring software, it is just a matter of time … the software development costs are not something that will be too concerning for a company as wealthy as Apple,” said Stuart Cole, chief macro economist at Equiti Capital.
“The bigger issue is that this is not very good PR for Apple, suggesting as it does that Apple is stealing technology from competitors rather than developing its own. Apple is fighting this lawsuit more with an eye on what it means for their future health-wearable products rather than this specific blood oxygen monitoring piece of software,” he said.
In a four-paragraph ruling on Wednesday, the appeals court said it would halt the ban while it considers Apple’s motion for a longer-term pause during the appeals process. The court gave the ITC until Jan. 10 to respond to Apple’s request.
U.S. President Joe Biden’s administration declined to veto the ban on Tuesday, allowing it to take effect. Apple asked for a pause of the ban later that day.
Apple has said it is working on a range of legal and technical options.
On Tuesday, the company told the court that U.S. Customs and Border Protection is considering whether redesigned versions of its watches infringe Masimo’s patents and can be imported. The customs agency has set a target date of Jan. 12 for its decision, Apple said.
Following the appeals court decision on Wednesday, Apple can sell, for now, the Series 9 and Ultra 2 smartwatches in the U.S. It had paused sales last week due to the ITC decision. The watches had remained available at other retailers including Amazon (AMZN.O), Best Buy (BBY.N), Costco (COST.O) and Walmart (WMT.N).
Contacted by Reuters after the decision, Apple stores on Fifth Avenue and the Upper East Side in New York said they were not yet selling the smartwatches and did not know when they would be available.
The ban did not affect the Apple Watch SE, a less-expensive model without a pulse oximeter. Previously sold watches also were not be affected by the ban.
A jury trial on Masimo’s allegations against Apple in California federal court had ended with a mistrial in May.
Apple’s wearables, home and accessory business, which includes the Apple Watch, AirPods earbuds and other products, brought in $8.28 billion in revenue during the third quarter of 2023, according to a company report.
