Apple Fights for Watch Future as US Ban Looms Large

In response to a complaint from the medical monitoring technology firm Masimo, Apple on Tuesday challenged a decision to prohibit imports of its watches after U.S. The administration of President Joe Biden chose not to veto a federal tribunal.

The internet behemoth also submitted an emergency request to the US on Tuesday. the prohibition to be lifted by the Court of Appeals for the Federal Circuit.

It requested that the Federal Circuit postpone the prohibition until at least the U.S. Customs and Border Protection determines if updated models of its timepieces violate Masimo's patents and suspends the prohibition while the court reviews Apple's application. Apple stated that the customs agency must make a decision by January 12.

Masimo has charged Apple with stealing its pulse oximetry technology, hiring away its staff, and putting it into the well-known Apple Watch.

An order from the U.S. International Trade Commission (ITC) prohibits the sale and import of Apple Watches equipped with blood-oxygen level-reading technology. Beginning with the 2020 Series 6 model, Apple has integrated a pulse oximeter function into its smart watch lineup.

After careful consideration, Trade Representative Katherine Tai decided not to revoke the prohibition; the ITC's judgment became final on December 26, the Trade Representative's office said on Tuesday.

Legal Challenges and Industry Implications

Apple has appealed the ban on its Apple Watch Series 9 and Apple Watch Ultra 2 to the U.S. Court of Appeals for the Federal Circuit in Washington, according to a spokesperson from the company.

Expressing strong disagreement with the decision and resulting exclusion order by the U.S. International Trade Commission (USITC), Apple is taking all necessary measures to expedite the return of the mentioned products to customers in the U.S. The USITC recently denied Apple's request to temporarily halt the ban during the appeal process and opposed the company's plea for the Federal Circuit to intervene in a court filing issued on Tuesday.

A spokesperson from Masimo characterized the decision by the International Trade Commission (ITC) as "a victory for the integrity of the U.S. patent system, and ultimately American consumers."

Typically, companies involved in such disputes opt for settlements, but according to Nicholas Matich, an intellectual property attorney at the law firm McKool Smith, Apple may be considering a swift redesign or removal of the infringing feature.

Matich noted that while it is not legally unusual for the ITC to issue an exclusion order, what stands out in this case is the high-profile nature of the product in question and Apple's decision to abide by the ITC order instead of pursuing a settlement.

Read also: SEC Ready to Unleash Spot Bitcoin ETF, Potentially Reshaping Crypto Landscape

Apple's Appeal and the ITC Case Outlook

According to a note from Stifel analysts, their litigation specialist projected that an Apple appeal may push out the "final" ITC case ruling by around a year.

Since last week, Apple has suspended sales of its Series 9 and Ultra 2 smartwatches in the US; but, as of Tuesday, the devices are still accessible from other stores including Amazon, Best Buy, and Walmart .

The less costly Apple Watch SE model is unaffected by the prohibition and will still be available for purchase. The restriction will not apply to watches that have already been sold.

In May, a jury trial in federal court in California concerning Masimo's accusations resulted in a mistrial. Apple has filed a new lawsuit against Masimo in federal court in Delaware for patent infringement. Apple refers to Masimo's legal activities as a "maneuver to clear a path" for its own rival smart watch.

Since 2013, when the administration of President Barack Obama reversed an import restriction on Apple's iPhones and iPads due to the company's patent battle with Samsung, no presidential administration has rejected an ITC verdict.

In February, the Biden administration declined to veto a separate import restriction for Apple Watches due to a complaint from the medical technology company AliveCor over patent infringement. For other reasons, the ITC has put the prohibition on hold.

Related article: Holiday Season Could Leave Luxury Retailers Drowning in Unsold Inventory