In a surprising announcement on Monday, Apple admitted that its Series 9 and Ultra 2 smartwatches will be temporarily pulled from its shelves in the United States starting this week. The catalyst? A patent dispute over the blood oxygen feature these products boast of.
What Sparked this Controversy?
The problem emanates from a verdict given in October by the International Trade Commission of the U.S. The ITC suggested a potential import ban on Apple Watches, which are found to violate the patent rights of medical technology company Masimo.
The hard-hitting decision is under President Joe Biden's review until December 25. Despite this, Apple leaps to comply should the decision be maintained. Katherine Tai, from the Office of the U.S. Trade Representative handling the case, communicated that all facets of the case are under earnest consideration.
Without veto, the ban will roll into effect from December 26.
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How Will Apple Navigate this Choppy Sea?
Moving proactively, Apple stopped online sales of the disputed watches on December 21 and paused the sale from retail outlets after December 24. The decision will not affect other models that do not incorporate the disputed blood oxygen sensor, such as the lower-priced Apple Watch SE model.
Ryan Reith, IDC's mobile device tracking efforts program vice president, propounded that while the U.S. holiday sales of Apple Watches won't take a blow, the full brunt of the ruling will unfold in the slower sales months of January and February. Reith suggested Apple reach a settlement or devise alternatives to the blood oxygen sensor technology.
Could a Negotiation with Masimo Be the Solution?
In response to these developments, Masimo CEO Joe Kiani vocalized his willingness to negotiate with Apple. However, he underlined the importance of upholding the ITC decision to safeguard intellectual property rights and maintain public trust.
Meanwhile, Apple enjoys approximately a quarter share of the global smartwatch market, a fraction that typically surges during holiday sales. Despite the ruling, the Series 9 and Ultra 2 models will remain available outside the U.S.
Will Apple Successfully Contest the Repercussions of ITC's Decision?
Apple, believing the ITC's findings to be flawed, intends to appeal the decision to the Federal Circuit. Following the resolution, Apple's shares nosedived by 0.9% on Monday.
Apple and Masimo's legal tug-of-war dates back to allegations by Masimo of Apple poaching its employees and integrating purloined pulse oximetry technology into the popular Apple Watch. While a jury trial over Masimo's claims ended in a mistrial earlier this year, the U.S. Patent and Trademark Office struck Apple's requests to review the patents.
How is Apple Responding Behind the Scenes?
Apple engineers are reportedly tweaking the watch algorithms to adjust how the technology determines oxygen saturation and presents data. According to an Apple spokeswoman, they are preparing retail outlets for the transformation and working on various legal and technical alternatives, including a workaround submission to the U.S. customs agency.
The question remains: in the world of hardware patent disputes, will Apple modify its hardware sufficiently to appease Masimo while reentering the market?
What Lies Ahead for Apple?
The implications of such patent disputes can be monumental, and the case marks a rare instance when a President hasn't vetoed an ITC ruling since 2013. Despite all odds, Apple's wearables, home, and accessory business, including the Apple Watch and AirPods, fetched a whopping $8.28 billion in the third quarter of 2023.
In such high-stakes situations, backed by significant business and reputation considerations, the cruciality of legal assistance from experienced lawyers can't be overstated. For those embroiled in similar turbulence around patents or intellectual property, don't hesitate to seek help from an accomplished lawyer today. They are indispensable in effectively dealing with such matters while keeping your business concerns at the forefront.
