Could Apple face an ITC import ban of its watches?

Apple has had a bit of a bruising lately from small medtech firms, most recently from a US health monitoring company over claims that it copied patented technology in its Apple Watch.

In what turns out to be a multifaceted dispute against Masimo Corporation, the tech giant has lost in the most recent case—a patent clash which could, at worst, result in an import ban of the offending products in the US.

Apple, through the importation, sale and distribution of its smartwatches that feature light-based pulse oximetry functionality and components, has been found to have violated Section 337 of the Tariff Act, according to an Administrative Law Judge (ALJ) in Washington last week (January 10).

Following a months-long investigation by the US International Trade Commission (USITC), the ALJ ruled that Apple’s pulse oximeter sensor, first released with the Apple Watch Series 6 in 2020 and which measures levels of blood oxygen, infringes one of five patents belonging to Masimo.

Now the ITC has announced it will consider whether to implement an import ban on the Apple Watches in question.

Market debut

Masimo, which has manufactured hospital equipment—including pulse oximeters—since 1989, has only recently entered the consumer market with the launch of its smartwatch, the W1, in August 2022.

The Delaware-based company claims that its W1 is the first wearable device on the market to provide consumers with accurate, continuous health data, including oxygen level, hydration index, and pulse, heart, and respiration rates.

Joe Kiani, CEO of Masimo, said in a statement last week: “We are happy that the ALJ recognised Apple’s infringement of Masimo’s pulse oximetry technology and took this critical first step toward accountability.

“Today’s decision should help restore fairness in the market. Apple has similarly infringed on other companies’ technologies, and we believe today’s ruling exposes Apple as a company that takes other companies’ innovations and repackages them.”

Apple, meanwhile, alleges that both Masimo and co-defendant Sound United (SU) collaborated to sell the W1 with a design that copies Apple Watch’s patented designs. The firm issued a press statement saying: "At Apple, our teams work tirelessly to create products and services that empower users with industry-leading health, wellness, and safety features.

“Masimo is attempting to take advantage of these many innovations by introducing a device that copies Apple Watch and infringes on our intellectual property, while also trying to eliminate competition from the market.

“We respectfully disagree with today’s decision, and look forward to a full review by the commission.”

A long and winding dispute

Masimo’s SET pulse oximetry technology was the company’s seminal product, which helps reduce blindness in babies in the neonatal intensive care unit, and treats post-surgical patients on opioids and COVID patients remotely.

According to Apple’s most recent complaint, Masimo began to notice in or around 2018 that “the nature of health technology was changing”. “For example, Masimo noted to investors in 2018 that leading technology companies, including specifically Apple, had expanded into consumer health technology,” stated Apple.

The complaint went on to say that in 2020, Masimo again referenced Apple’s success and remarked: “If we are unable to successfully compete against [Apple], our financial performance could decline.”

The tech giant pointed out that Masimo referenced the Apple Watch in 2021, telling investors: “To effectively compete, we may need to expand our product offerings and distribution channels. . . .”

“Seeing the continued success of Apple Watch, Masimo tried to pivot to focus on the consumer,” sais Apple. “Specifically, Masimo set out to launch a smartwatch. But Masimo had never designed a smartwatch.

“Delivering a high-quality consumer product to market from scratch would have taken years of investment and innovation that Masimo did not have.

“Thus, rather than take the necessary time to develop its own innovations to make W1 attractive to consumers, Masimo copied Apple Watch’s patented designs and brought carefully timed lawsuits to try to kick Apple out of the smartwatch segment.”

Masimo hits back

In January 2020, more than 18 months before the commercial release of the W1, Masimo filed a patent lawsuit against Apple, targeting the Apple Watch.

Then, in June the following year, Masimo filed a complaint before the ITC, seeking an order that bans the Apple Watch from being imported into the US, alleging the mobile manufacturer infringed five of its blood pressure monitoring patents.

In February 2022, Masimo announced that it would acquire SU, also based in Delaware, a move which Apple claims was made to bring the W1 to market as quickly as possible.

“Critically, Masimo’s sudden pivot into watches required consumer distribution channels for W1 that Masimo lacked,” continued Apple.

Apple claims that “it was clear that W1 had copied the patented designs of Apple Watch”. “Indeed, the design of W1 and its charger so closely resembles those of Apple Watch that the only plausible inference is that W1 copied Apple Watch’s patented designs,” said the firm.

In October, shortly after Masimo’s launch of the W1 in August last year, Apple fired two lawsuits at Masimo and SU for “direct infringement and wilful infringement of four design patents related to smartwatches and smartwatch chargers” (US patents D735,131; D883,279; D947,842; and D962,936).

Masimo answered the complaint on December 12, and SU moved to dismiss Apple’s claims, which Apple has asked to be denied, due in part to “Masimo’s deliberate decision to make a product that blatantly rips off the patented designs of Apple Watch…”

Trade secrets theft

Apple and Masimo’s patent fight extends to theft of its trade secrets relating to the pulse oximetry technology. Back in 2020, Masimo sued the tech giant, resulting in a California federal court finding against Apple over trade secret theft.

Marcelo Lamego, a former engineer from Masimo, was also a former chief technical officer at Cercacor, a Masimo spinoff which owns certain licence rights to many Masimo patents. Lamego left Cercacor in 2014 to work at Apple and later launched his own company, True Wearables, which created a wireless, wearable pulse oximeter device.

In November 2022, Apple—via Lamego—was found to have misappropriated Masimo’s secrets and was ordered to abandon at least 12 patent applications containing Masimo’s trade secrets.

And Masimo has a separate trade secrets lawsuit pending against Apple, which is currently set for trial in March 2023, alleging that Apple, through Lamego and other former Masimo employees, misappropriated Masimo’s trade secrets in developing certain physiological monitoring features of the Apple Watch.

Medtech rival

After Apple added cardiac monitoring capabilities to the Apple Watch, AliveCor—a medical device and AI company—promptly sued the firm in 2020. This sparked a flurry of cases that resulted in varying outcomes.

For example, the ITC found against Apple in July 2022, potentially paving the way for an import ban on the Apple Watch; and the US Patent Trial and Appeal Board (PTAB) ruled against AliveCor in December on the basis of obviousness.

AliveCor, which produces ECG (electrocardiogram) hardware and software for consumer mobile devices, was the first company to receive clearance from the US Food and Drug Administration (FDA) for a medical-device accessory to the Apple Watch in 2017.

Like Masimo, AliveCor is also trying to ban sales of the Apple Watch due to allegations that Apple’s smartwatch infringes its medtech patents.

For both cases, the deadlines are looming for the ITC to decide. Watch this space.

Apple’s legal representatives declined to comment when approached by LSIPR about the current case.