Apple has announced that it is halts sales of its latest Apple Watch model due to a patent dispute.. The decision comes after the International Trade Commission ruled that several Apple Watches infringe on patents held by Masimo, a medical technology company. As a result, Apple will cease online sales of its flagship smartwatches on Thursday and retail sales on Christmas Eve. The ruling could potentially trigger increased demand for the watches in the final week of holiday shopping.
Apple now faces the choice of negotiating a licensing agreement with Masimo or appealing to the Biden administration to reverse the ruling. However, Masimo’s CEO, Joe Kiani, alleges that Apple has not attempted to engage in licensing negotiations and instead appealed directly to President Biden to overturn the ruling. Apple, on the other hand, maintains that it strongly disagrees with the order and is exploring various legal and technical options. The pause in sales could have significant implications for Apple, as the Apple Watch accounted for nearly $20 billion of its annual sales.
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Masimo Wins Patent Dispute Against Apple Watch
Halts Sales Apple Watch Models by Apple
Potential Run on Watch Sales Before Christmas
In a significant legal victory for Masimo, a medical technology company based in Irvine, California, the International Trade Commission ruled that several Apple Watch models infringe on Masimo’s patents. As a result, Apple has decided to temporarily pause the sales of its flagship smartwatches both online and at retail locations. This decision, which comes just days before Christmas, may lead to a surge in demand as consumers rush to purchase the limited stock available.
Apple’s Loss in Patent Case
Ruling by the International Trade Commission
Infringement on Masimo’s Patents
Apple’s recent loss in the patent case against Masimo has far-reaching implications for the company. The ruling issued by the International Trade Commission confirms that Apple’s smartwatches use technology that infringes on Masimo’s patents. This decision holds significant consequences for Apple, as it necessitates the suspension of sales for affected Apple Watch models.
Details of the Patent Dispute
Apple’s Use of Technology and Poaching of Employees
Pulse Oximeter Capabilities Patented by Masimo
The patent dispute between Masimo and Apple centers around the technology used in Apple’s smartwatches to detect pulse rates. Masimo alleges that Apple not only utilized their patented pulse oximeter capabilities without permission but also engaged in employee poaching, acquiring key executives and multiple staff members from Masimo. The pulse oximeter capabilities, which measure the oxygen-carrying capacity of red blood cells, were patented by Masimo and are a critical feature of their medical technology.
Pressure on Apple to Cut a Deal
Licensing Negotiations with Masimo
Appealing to the Biden Administration
With the ruling requiring Apple to halt sales of infringing Apple Watch models, the pressure is now on Apple to reach a resolution with Masimo. Apple has the option to engage in licensing negotiations with Masimo to acquire the rights to use their patented technology legally. Alternatively, Apple could appeal to the Biden administration, seeking a reversal of the International Trade Commission’s ruling. The outcome of these negotiations or appeals could significantly impact Apple’s ability to resume sales and avoid further damage to its reputation.
Apple’s Response to the Ruling
Disagreement with the Order
Pursuing Legal and Technical Options
In response to the ruling against them, Apple has expressed strong disagreement with the International Trade Commission’s order to halt sales of affected Apple Watch models. The company maintains that it is exploring various legal and technical options in an effort to ensure the availability of Apple Watch to its customers. Apple’s determination to navigate this situation suggests that they are actively pursuing avenues to challenge the ruling and find alternative solutions.
Masimo CEO’s Comments on Apple’s Actions
Accusations against I.T.C.
Apple’s Lack of Response
The CEO of Masimo, Joe Kiani, has openly criticized Apple’s approach to the patent dispute. Kiani accuses the International Trade Commission of potentially aiding “patent trolls” in siding with Apple. He also sheds light on Apple’s lack of response to Masimo’s licensing negotiations, suggesting that Apple may be pursuing alternative strategies such as appealing directly to the Biden administration. These comments underscore the tensions and challenges surrounding this patent dispute.
Masimo’s Offer to Apple
The Use of Masimo’s Chip
Getting Approval from the FDA
Despite the ongoing dispute, Masimo’s CEO, Joe Kiani, has extended an offer to Apple. Masimo is willing to provide Apple with a chip that incorporates their pulse oximeter technology, designed specifically for the Apple Watch. This chip is currently utilized in Masimo’s FDA-approved medical watch, called the W1. This offer hinges on Apple’s willingness to collaborate with Masimo and potentially seek FDA approval for the integration of their chip into Apple Watch devices.
Apple’s Use of Pulse Oximetry
Difference from Masimo’s FDA-Cleared Device
Impact on Apple’s Sales
Apple’s inclusion of pulse oximetry technology in their smartwatches has become a critical selling point for the company. However, unlike Masimo’s FDA-cleared W1 device, Apple’s watches have not received the same level of clearance for pulse oximetry usage. This distinction has significant implications for Apple’s ability to market their watches as medical devices. Furthermore, the ruling and subsequent halt in sales could potentially impact Apple’s overall sales performance, given the popularity and revenue contribution of their Apple Watch line.
Apple’s Influence on I.T.C. Rulings
Previous Presidential Veto of I.T.C. Ban
Potential for Biden to Reverse the Ruling
Apple’s history with the International Trade Commission suggests a potential avenue for resolving the current patent dispute. In the past, Apple successfully persuaded the Obama administration to veto an I.T.C. ban on the sale of certain iPhones and iPads. This precedent raises the question of whether Apple may pursue a similar course of action with the Biden administration. There exists a possibility that the Biden administration could reverse the current ruling, ultimately affecting the outcome of this dispute.
Reporter Focus on Apple and Silicon Valley
Impact on Apple’s Business and Industry
Conclusion
The ongoing patent dispute and subsequent sales halt for Apple’s smartwatches in the final week before Christmas have captured the attention of reporters covering Apple and Silicon Valley. The outcome of this legal battle will undoubtedly have profound implications for Apple’s business and the wider technology industry. As Apple navigates the challenges posed by the ruling against them, stakeholders eagerly await the resolution and its potential impact on the future of Apple Watch sales and the broader smartwatch market.
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