Apple Watch Controversy: Masimo’s CEO Speaks Out


Masimo CEO

A few weeks ago, we reported that Apple would stop selling the Apple Watch Series 9 and Apple Watch Ultra 2 in the U.S. This was due to the US International Trade Commission (ITC) ruling that Apple watch violated Masimo’s patent. Last week, Apple filed an appeal against the decision of the ITC requesting that the court pause the ban. The US Court of Appeals for the Federal Circuit ruled in favour of Apple and paused the ban. With this pause on the ban, Apple is now allowed to resume sales of the affected smartwatches which are Apple Watch Series 9 and Apple Watch Ultra 2. The Court’s decision to halt the ban is temporary, as it gives the ITC until January 10 to respond to Apple’s request.

Masimo CEO
Masimo CEO tells Bloomberg “This is not an accidental infringement”

Massimo’s CEO speaks

However, Masimo’s CEO has now explained why the company is in a lawsuit with Apple. He also said that this lawsuit with Apple is a “fight to the end” case. In an interview with the Wall Street Journal, Masimo CEO Joe Kiani explained why he’s determined to fight Apple to the end. He said

“No one is standing up to them. If I can do that, maybe Apple will get better.”

Kiani revealed in the interview that Masimo has spent about $100 million in litigation with Apple. This battle began in January 2020. The Wall Street Journal noted that Masimo’s total profits in 2022 were about $144 million. Before deciding to go to court with Apple, Masimo employees and friends warned Kiani of the risks. Kiani adds in the interview

“They told me I was out of my mind and that I couldn’t fight Apple … that they have unlimited resources.”

Massimo has won similar legal battles

While Masimo’s legal battle with Apple is likely to continue for years, the company has successfully won similar cases in the past. In 2006, Kiani won a seven-year patent battle with Nellcor, then a major provider of pulse oximeter equipment. In 2016, he defeated Royal Philips in another patent infringement lawsuit. As part of a 2006 settlement with Nellcor, Masimo received nearly $800 million in damages and royalties. In a 2016 Royal Philips settlement, the company paid Masimo $300 million and agreed to a licensing deal that “generated more than $1 billion in revenue for Masimo.”

Kiani said Apple has not yet engaged in “serious settlement discussions” with Masimo. In previous interviews, Kiani has said that Masimo is open to a settlement with Apple, but that “negotiations require the participation of both parties.”

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“I felt I had to do this,” Kiani concluded. “If I could get the most powerful company in the world to stop inappropriate behaviour, that would be more impactful than anything else I do.”

Apple Watch Ultra

Background

Apple has been involved in a protracted patent dispute with Masimo, a medical technology company, over the technology used in the Apple Watch. The conflict began in January 2020 when Masimo accused Apple of poaching its employees and infringing on its patents to improve the Apple Watch. Masimo filed a complaint against Apple, alleging that the company had stolen its trade secrets and infringed on 12 of its patents.

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In response, Apple filed petitions with the Patent Trial and Appeal Board (PTAB) to challenge all 12 patents-in-suit. In October this year, the U.S. International Trade Commission (ITC) issued an order that could potentially ban the import of certain Apple Watches due to the patent dispute. The ITC found that the Watches infringed on one of Masimo’s five patents covering the pulse oximetry technology used in the watches. As a result, the ITC issued an import ban on the infringing watches, which was set to take effect on February 26 next year.

However, Apple acted on the deadline early, pausing the sales of the affected Apple Watches in the U.S. after losing the patent case. The import ban does not affect Apple Watches already purchased with the blood oxygen feature. The company also appealed to the US Court of Appeals for the Federal Circuit. The court ruled in its favour and its watches are now back on the market at least until January 10th when the ITC will appear before the court.

Final Words

Masimo’s CEO Joe Kiani has a long history of battling with patent cases in court and getting decent settlements. This is evident in Masimo’s 2006 case with Nellcor and its 2016 case with Royal Philips. In both cases, it got a settlement fee of $800 million and $300 million respectively. It appears that Kiani has a target to continue with the case and force Apple to the negotiating table.

If the Apple Watch S9 and Ultra 2 are banned, it will mark a significant change in Apple’s product lineup. These models were well-received at their launch. However, the hands of Apple are tied in this situation. The company has no choice but to comply with the ruling of the ITC. If the court gives a nod to ITC on January 10th, then Apple will have no choice but to join Masimo on the negotiating table.

The dispute has significant implications for the wearable technology market and the use of pulse oximetry technology in smartwatches. Masimo’s CEO, Joe Kiani, has emphasized that the company is the rightful creator and inventor of the technology. The outcome of the patent dispute will likely have a lasting impact. Its impact will be felt in the development and commercialization of health-related technologies in the consumer electronics industry. What do you think about the ITC ruling about the Watch S9 and Apple Watch Ultra 2? Let us know your thoughts in the comment section below.

 

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