Katherine Laidlaw wrote an article for The Hustle titled Will this be the last Christmas you can get an Apple Watch? (3 December 2023).
« The innovation, known as a pulse oximeter, helped build his company, Masimo, from a one-person operation in a California garage into a billion dollar behemoth that monitors the health of 200m+ patients across the U.S. »
« Then, in 2019, Kiani learned that Apple, the ~$3T industry titan, might be infringing on the tech he’d spent decades of his life perfecting. »
« Of course, he was also planning the launch of a watch of his own, the W1, with some of the very capabilities Apple had just unveiled. »
« This October, Kiani’s longtime lawyer delivered him the good news: He’d won a critical ruling from the International Trade Commission [ITC], and Apple had lost. The result produced an import ban on several recent models of Apple watches, effective December 26, throwing the future of the Apple Watch, worth an estimated ~$14B to $18B, into question. »
« The first software patent, though, was issued back in 1968, and since then tech companies like Apple have shelled out millions to protect their IP. A smartphone draws on technology covered by 250k patents, according to one estimate by researchers in 2012…. Google now holds more than 100k globally. Samsung has more than 350k. And Apple has more than 95k patents to its name….The uptick in patents granted in the U.S. has turned them into their own currency. Blackberry recently sold 32k patents to Key Patent Innovations, a patent monetization company, for $170m, plus royalties on future profits. »
« in 2013, Apple came calling, inviting Kiani for a visit… Kiani traveled to Cupertino to meet with company executives about possibly licensing his tech for the Apple Watch. »
« The next month, the company claimed, Apple hired away Masimo’s Chief Medical Officer. A few months later, they hired another Masimo scientist, one of the named inventors on the patents in question. Apple would go on to hire 20+ Masimo employees, and open an office around the corner in Irvine, Calif., so they wouldn’t have to move.
Fast forward seven years to the fall of 2020, and Apple releases the Series 6 watch, the first with a blood-oxygen level reader, the technology Masimo believes it owns. It was also the first to be manufactured in China. »
« The overseas manufacturing location gave Masimo an opportunity to mount an ITC challenge against Apple. The ITC is set up to protect domestic industry by guarding against unfair competition, trade secret misappropriation or antitrust issues. It’s also an easier avenue than going to court.
- An ITC proceeding is faster than filing a lawsuit, for one.
- And two, the ITC can issue an exclusion order, or an import ban, which gets products off the shelves and which matters if you’ve just had your own watch with a blood-oxygen level reader in it approved by the FDA. (Looking at you, Kiani.) »
« Despite the thousands of patents awarded every year, cases where major companies sue each other or mount ITC challenges over patents are rare, which is partly what makes one like this fascinating, according to Jonathan Stroud, general counsel for Unified Patents, a patent advocacy organization based in Washington. “It’s rare because it’s destructive,” he says. “Nobody wins.” Some experts argue the conflicts are a drain on the U.S. economy and innovation. And they’re definitely a drain on shareholders. »
« What does this all mean for Apple? When the ITC ruled in Masimo’s favor, it issued an import ban on Apple Watches that allegedly use Masimo’s tech (most of them) — starting December 26. »
« The ITC is just one front in the companies’ very public patent fight. In 2020, Masimo also filed a trade-secret appropriation suit against Apple; Apple sued back in Delaware, accusing Masimo of bringing “carefully timed lawsuits” and alleging patent infringement of its own.
Decisions on each case have slowly been trickling out… In September, a federal appeals court also sided with Apple, and invalidated parts of Masimo’s patents. »
« Apple has a few more levers of its own to pull before customs begins to block watches from hitting U.S. soil. From now until December 26, President Joe Biden could issue a presidential veto of the decision. (This is unlikely — such a veto hasn’t been issued since 2013.) It can request a stay of the order, pending an appeal of the decision, which the ITC rarely grants. (Though an appeal is coming, according to Apple.) Or it can move its manufacturing to the U.S., which would skirt the ban. »
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