As Apple gears up for the release of the Apple Vision Pro, the tech titan has hit an unexpected stumbling block—a sanction by the ITC resulting in a ban on specific Apple Watch models. Notably, the Apple Watch Series 9 and Apple Ultra 2 are slated to be withdrawn from the market after the 24th of December, with a halt on online sales already in place. Although this turn of events caught consumers off guard, it’s likely Apple foresaw the potential for disruption following the U.S. International Trade Commission’s ruling that accused them of infringing on a patent held by the medical equipment producer Masimo. The ongoing legal battle has marched on since 2020, resulting in a decisive victory for Masimo that determined the future unavailability of these Apple Watch models.
The embargoed Apple Watches contain unique monitoring features patented by Masimo, thus barring Apple’s profit from these devices in the absence of a licensing deal with Masimo. The repercussions extend beyond inhibiting sales; they also mean certain models, especially those beyond warranty, will be left unrepairable, creating a conundrum not only for potential customers but also for current users.
Exploring the Rift in the Apple-Masimo Dispute
Masimo, an innovator in the healthcare tech industry, has created technologies for patient monitoring to foster better outcomes. Their SET Measure-through motion and low-perfusion pulse oximetry technology enables nonintrusive, constant, blood oxygen measurement. In 2020, the introduction of a similar feature in Apple Watches prompted Masimo and Cercacor Laboratories to allege that Apple poached their former employees to pilfer their technology.
Initially encompassing a broad spectrum of trade secret complaints, Apple vehemently dismissed the allegations, claiming that their technology fell outside Masimo’s proprietary claims. The trial concluded indecisively, with a hung jury leaning in favor of the medical company, resulting in a mistrial. While Apple expressed relief at the outcome, Masimo’s resolve remained firm in their quest to vindicate their rights and impose sanctions on Apple’s products through the ITC.
Adding further complexity, Apple launched a counterclaim accusing Masimo’s W1 smartwatches of mimicking their hallmark design and features. Despite prior legal clashes involving W1’s parental companies, Philips and Masimo chose to forge an alliance. However, in the continuing saga against Masimo, no amicable resolution seems forthcoming for Apple as the ban on their watches looms.
Uncertain Future for the Apple Series 9 and Apple Ultra 2
“A dominant firm’s infringement on a smaller competitor’s patent, particularly when competing directly or potentially in the market, stands as a flagrant violator of both antitrust and intellectual property laws. In this instance, along with others where Apple’s abusive market dominance is evident, the damages largely eclipse any benefits. Given that competition will rapidly fill any void left by Apple’s inability to deliver due to the imposed restrictions, consumers and the economy will witness minimal damage yet substantial gains.”
—Masimo’s statement to the ITC
Apple is poised to see its watches banished from sale as the accusation of patent infringement involving “light-based pulse oximetry functionality and components” stands firm. Both the Apple Series 9 and the Apple Ultra 2 will vanish from stores and online post 24th December. Apple had an opportunity to negotiate a licensing agreement or appeal directly to the U.S. President, who has ultimate authority over ITC rulings. Nevertheless, indications are that Apple abstained from collaborating with Masimo or seeking a compromise.
The imposed delay afforded Apple the chance to capitalize on holiday sales, but with the ban now public knowledge, it’s doubtful many customers will proceed with purchasing these models.
Consequences of the Ban on Out-of-Warranty Apple Watches
With newly-released watches off the table, one might presume holding onto older models is safe. However, reports suggest that Apple has instructed its service representatives that repairs and replacements for out-of-warranty devices, specifically the Apple Watch Series 6 and later, will cease. Exceptions like the Apple Watch SE seem to be excluded, but those with expired warranty watches are directed to third-party services, with no guarantees of a fix—definitely not an ideal situation for the latest watch owners.
The ITC’s ban presents a challenge that Apple is reluctant to acquiesce to, driving them to explore software changes that might help work around Masimo’s lawsuit. Masimo, on the other hand, doubts the efficacy of any software modifications without a complete redesign, given the core hardware’s centrality to the infringed patents. Reports from 9to5Mac highlight Apple’s substantial wearables revenue during Q1 2023’s holiday quarter. Although only a sliver of Apple’s total earnings, the impact of sustained sales disruption could severely affect the company. Apple plans to challenge the ruling with an appeal and is seeking advocacy for the Apple Watch as an essential health device, citing research dependent on its technology. Despite these efforts, the unchanged patented technology seems to make an overturn of the ban unlikely. We await the unfolding developments.
