On Thursday, a significant legal development occurred when the United States International Trade Commission (USITC) issued a Limited Exclusion Order (LEO) and a Cease and Desist Order (CDO) against specific Apple Watch models. The reason for these orders? The USITC has found that these Apple Watch models infringe on select Masimo patents related to light-based pulse oximetry technology, thereby violating U.S. trade laws. This victory for Masimo marks a turning point in the ongoing patent disputes between Masimo and Apple.

Background:

Masimo Corporation, a prominent player in the field of medical technology, has found itself embroiled in a long-standing legal dispute with tech giant Apple, Inc. The latest decision by the United States International Trade Commission (USITC) marks a pivotal moment in this ongoing battle. The USITC's ruling has found Apple infringing upon specific claims within two of Masimo's patents, ultimately resulting in the issuance of the Limited Exclusion Order (LEO) and the Cease and Desist Order (CDO). This legal conflict is just one of several, with both companies making claims and allegations against each other. Apple has separately claimed that Masimo's legal actions are a maneuver to pave the way for its own competing smartwatch, while Masimo has alleged that Apple broke off partnership discussions and hired many of its employees to develop pulse oximetry technology independently for the Apple Watch. Moreover, both companies are currently engaged in multiple Inter Partes Review proceedings before the Patent Trial and Appeal Board (PTAB).

USITC's Ruling and Consequences:

The USITC's recent rulings have significant implications for the ongoing legal dispute. The LEO effectively puts a stop to the importation of Apple Watch models that infringe on Masimo's patented light-based pulse oximetry technology. This decision prevents any further introduction of such infringing devices into the United States. In addition, a CDO has been enforced, blocking Apple from selling existing inventory of the infringing Apple Watch models. This action ensures the immediate cessation of the distribution of these products in the market.

Presidential Review and Appeals:

The ITC Commission has affirmed the Administrative Law Judge (ALJ) initial determination that found Apple in violation of Masimo's light-based blood-oxygen level technology patents. The enforcement of the ban is subject to the President's decision, with presidential vetoes in such cases being rare. Apple also has the option to appeal to the U.S. Court of Appeals for the Federal Circuit once the review period ends. After the presidential review, the Limited Exclusion Order (LEO) and Cease and Desist Order (CDO) will take effect.

Apple's Financial Stakes:

Apple is currently grappling with an import ban on Apple Watch products as part of a separate legal conflict with AliveCor, a medical technology company. The ban, initially imposed by the ITC in February, has been put on hold while discussions regarding the validity of AliveCor's patents continue. Over the years, services, wearables, home, and accessories have increasingly become a significant part of Apple's net sales. They currently constitute 10.13% of the company's overall revenue. Apple Watch has established its dominance in the global smartwatch market, holding an impressive 53.7% share. In 2020, the Apple Watch claimed the title of the best-selling wearable, with an impressive 33.9 million units sold. During the first quarter of 2021, the Apple Watch generated a remarkable revenue of $12.97 billion.

Apple's and Masimo's Response

In an emailed statement, Apple expressed, "Masimo has wrongly attempted to use the ITC to keep a potentially life-saving product from millions of U.S. consumers, while making way for their own watch that copies Apple." Apple clarified that the decision wouldn't have an immediate impact on Apple Watch sales and noted their intent to appeal the ruling in the federal circuit court.

According to Joe Kiani, Masimo's Founder, Chairman, and CEO, "Today’s ruling by the USITC sends a powerful message that even the world’s largest company is not above the law. This important determination is a strong validation of our efforts to hold Apple accountable for unlawfully misappropriating our patented technology."

The recent decision by the USITC against specific Apple Watch models has set the stage for a new chapter in the ongoing patent disputes between Masimo and Apple. As these legal battles continue to unfold, the broader industry is closely watching the outcomes, as they will undoubtedly have significant ramifications. The financial stakes are substantial for Apple, with a growing share of its revenue coming from services, wearables, home, and accessories. The Apple Watch's commanding presence in the global smartwatch market adds an extra layer of complexity to the situation. With Apple's intention to appeal and Masimo's belief in the validity of their efforts, the road ahead remains intricate and uncertain.