If you were planning on buying an Apple Watch for your loved one this holiday season, you will not find any on the shelves of your local Apple Store. Why? It is not because Apple sold out – and the tech giant is not gearing up for a new release just before Christmas. In a rare legal defeat, Apple has been forced to sweep its shelves clean of these devices. Apple has been accused of stealing proprietary technology from a biotech company, and the company cannot sell a single Apple Watch until this legal issue has been resolved. This story highlights the serious legal issues that may arise from patent disputes in the modern era.

What is the Story Behind Apple’s Patent Dispute?

The first thing to note is that this move by Apple is not voluntary. Unlike most product recalls, Apple has been completely banned from selling its smartwatches in the United States due to a recent patent lawsuit filed by Masimo. The governing body ordering Apple to stop selling its smartwatches is the International Trade Commission. Technically speaking, there was an option to wait 60 days before complying with the ITC order, but Apple apparently decided to “play it safe” and immediately suspend any further sales of the watch. This includes watch sales online.

The affected models are the Series 9 and the Ultra 2 Apple Watches. Both of these models allegedly contain proprietary technology developed by Masimo – a company known for its wearable biotechnology. This med-tech company alleges that Apple stole its technology without permission. While Masimo is a well-known company within the biotech industry, it is a small-time player in the technology space compared to Apple.

The technology in question is a non-invasive LED module that can collect blood-related data from the wearer. It is worth noting that this technology is not exactly a new addition to Apple Watches. In fact, Apple Support states that it is possible to use the “Blood Oxygen App” to measure the percentage of oxygen in your red blood cells on Apple Watches Series 6 or higher. In other words, the new technology on the Series 9 represents a serious leap forward compared to previous models – a leap that Masimo claims came off the back of their own labor and innovation. Or perhaps Masimo has been trying to sue Apple ever since the release of Series 6. It’s not exactly clear.

According to the official Technical Specifications of the Series 9, the watch features a “blood oxygen sensor,” an “electrical heart sensor and ECG app,” a “third-generation optical heart sensor,” “high and low heart rate notifications,” “temperature sensing,” and other medical technology. It’s not clear whether Masimo’s lawsuit refers to all of these features, a specific hardware component, or a combination.

How Much Could Apple Lose Due to this Patent Dispute?

In 2015, Apple earned $1 billion in revenue from its Smart Watches alone. In 2023, the Business of Apps estimated that the Apple Watch branch of the business is worth up to $18 million. Others estimate that the Smartwatch industry represents an opportunity worth up to $40 billion for Apple. However, this pales in comparison to the earnings generated by iPhones. In Q4 2023 alone, Apple raked in approximately $44 billion from iPhone sales. Long story short? The loss of its Apple Watch wing will not impact the tech company much, even if this ban occurs during the holiday season. In addition, Apple’s stock seems completely unaffected by the ban, showing no real losses.

 What Is Masimo?

While everyone has undoubtedly heard of Apple, many Americans might be completely unaware of Masimo. The company specializes in health technology and consumer electronics. Like Apple (and countless other American tech companies), it is headquartered in California. Its specialty is the manufacture and distribution of “patient monitoring devices,” particularly non-invasive sensors. That being said, it is also relatively well-known for its home audio products.

Founded in 1989, the company went public in 2007 and quickly became one of Forbes’ “top 20 companies under a billion dollars in revenue.” In 2012, Masimo began obtaining FDA clearance and patents for proprietary Signal Extraction Technology (SET) pulse oximetry. This technology is at the heart of the Apple patent dispute. It works by using LED light diodes to measure hemoglobin levels and respiration rates non-invasively. In other words, a patient or doctor can obtain this data without piercing the skin – by simply placing the device against the wrist. In 2022, Masimo launched its own smartwatch that apparently features this technology – although its release was somewhat limited.

The leader of Masimo is CEO Joe Kiani, the same electrical engineer who originally founded the company back in 1989. On December 19, 2023, Kiani publicly commented on the ongoing patent dispute with Apple, stating:

“This is not an accidental infringement — this is a deliberate taking of our intellectual property. I am glad the world can now see we are the true inventors and creators of these technologies.” He went on to say, “Apple could be an example of how to do things right and do things well, and they didn’t have to steal our people. We could have worked with them.”

Kiani also stated that he was willing to accept a financial settlement from Apple to resolve the issue. However, he admitted (as of this writing) that he hadn’t received any contact from the iPhone manufacturer, lamenting that further progress seemed unlikely because “It takes two to tango.”

 Work with a Qualified Tech Lawyer to Resolve Technology Disputes

If you’ve been searching for a qualified technology lawyer who can help you resolve patent disputes, look no further than John P. O’Brien. Although this particular patent dispute has made headlines across the world, similar disputes occur with each passing week. As we have seen, these patent disputes have the power to disrupt commercial operations and lower profit margins – often during the most crucial financial quarters. Whether you are facing a technology patent dispute or you believe that your technology is being stolen by a rival, a legal professional can help. Book your consultation today to learn more.