“Apple to Pause Smartwatch Sales Following Patent Infringement Ruling”
In a surprising move, Apple Inc. announced on Monday that it would halt the online sales of its flagship smartwatches starting Thursday, and at retail locations on Christmas Eve. This decision comes in the wake of a patent infringement case that Apple lost two months ago over the technology its smartwatches use to detect people’s blood oxygen levels.
The International Trade Commission (ITC) in October ruled that several Apple Watches, including the Apple Watch Series 9 and Watch Ultra 2, infringed on patents held by Masimo, a medical technology company based in Irvine, California. Consequently, Apple was ordered to stop selling these watches after Christmas, potentially triggering a surge in sales in the final week of holiday shopping.
In court, Masimo accused Apple of poaching its top executives and more than a dozen other employees, and subsequently releasing a watch with pulse oximeter capabilities, a technology patented by Masimo. This technology measures the percentage of oxygen that red blood cells carry from the lungs to the body.
To avoid a complete ban on sales, Apple was given two months to negotiate a deal with Masimo to license its technology, or appeal to the Biden administration to reverse the ruling. However, Masimo’s CEO, Joe Kiani, stated in an interview that Apple had not engaged in licensing negotiations. Instead, Apple appealed to President Biden to veto the ITC ruling, a move Kiani became aware of when the administration contacted Masimo about Apple’s request.
“They’re trying to make the agency look like it’s helping patent trolls,” Kiani said of the ITC. Apple did not respond to requests for comment on Kiani’s remarks. However, in a statement, the company said, “Apple strongly disagrees with the order and is pursuing a range of legal and technical options to ensure that Apple Watch is available to customers.”
Kiani expressed his willingness to sell Apple a chip that Masimo had designed to provide pulse oximeter readings on the Apple Watch. This chip is currently in a Masimo medical watch, the W1, which is approved by the Food and Drug Administration (FDA). The device uses algorithms to process red and near-infrared light to determine the oxygen-richness of the blood in arteries.
“If they don’t want to use our chip, I’ll work with them to make their product good,” Kiani said. “Once it’s good enough, I’m happy to give them a license.”
Apple introduced its first watch with pulse oximetry in 2020 and has included the technology, which it calls “blood oxygen,” in subsequent models. However, unlike Masimo’s W1 device, Apple hasn’t had its watches cleared by the FDA for use as a medical device for pulse oximetry.
The Apple Watch accounts for nearly $20 billion of the company’s $383.29 billion in annual sales, according to Bernstein Research. Apple is the largest smartwatch seller in the world, accounting for about a third of all smartwatch sales, according to Counterpoint Research.
Apple has had success in the past persuading presidents to veto ITC rulings. In 2013, the Obama administration overturned a ban on the sale of some iPhones and iPads, after the court determined that Apple had violated a patent that Samsung owned. Whether Apple will be successful in its appeal to the Biden administration remains to be seen.