Earlier this year, the US International Trade Commission (ITC) ruled that Apple had infringed on two patents from medical device maker Masimo. As a result, the ITC said it would impose an import ban on the Apple Watch Series 9 and Ultra 2<\/a> starting December 26th. At the time it was hard to believe that this would actually come to pass: Apple gets sued all the time, and even when it loses, how often does it actually face dramatic consequences?<\/p>\n<\/div>\n Well, now would be one of those times. Experts say that, barring a Christmas miracle, it\u2019s unlikely that Apple will find a way to escape the ban. Case in point, the company shocked everyone yesterday when it decided to preemptively pull the watches from its online store<\/a> starting December 21st at 3PM ET. And after the 24th, they\u2019ll disappear from Apple Stores, too.<\/p>\n<\/div>\n \u201cI think Apple sees the writing on the wall and they\u2019re preparing themselves,\u201d says Ben Levi, a partner at Levi Snotherly & Schaumberg, which has experience litigating ITC disputes.<\/p>\n<\/div>\n It\u2019s rare to see Big Tech lose \u2014 and with such tangible consequences at that. There are still ways that Apple can keep the watches on sale, but it\u2019ll likely take a lot of waiting or a lot of money to make it happen.<\/p>\n<\/div>\n This ban is the result of a long-standing patent dispute between Apple and the medical device maker Masimo. The latter is known for its pulse oximetry tech, generally referred to as SpO2 or blood oxygen saturation in the wearable world, and it claims that Apple is using that patented technology without permission.<\/p>\n<\/div>\n This particular story started about 10 years ago when Apple reached out to Masimo about a potential partnership around blood oxygen features on its wearables. Soon after, Apple reportedly poached several Masimo engineers and its chief medical officer<\/a>. And then in fall 2020, Apple released the Apple Watch Series 6 \u2014 its first Apple Watch to feature an SpO2 sensor to measure blood oxygen saturation levels. <\/p>\n<\/div>\n In 2020, Masimo filed a lawsuit in the US District Court in the Central District of California accusing Apple of stealing trade secrets<\/a> and infringing on 10 of its patents. That case dragged on and on, so Masimo then filed a separate case with the ITC in 2021. Then last year, Apple sued Masimo back, claiming the company made an Apple Watch clone<\/a> with its Masimo W1 Medical Watch<\/a>. Clearly, there\u2019s some bad blood here. But in this<\/em> case, the important thing is that the ITC sided with Masimo. In January 2023, it ruled that Apple Watches did in fact infringe on Masimo patents.<\/p>\n<\/div>\n The ITC then issued an import ban in October<\/a>, as well as an order to stop selling products infringing on Masimo\u2019s patents that had already been imported. We\u2019re currently nearing the end of a 60-day presidential review period, in which President Joe Biden or the US Trade Representative (USTR) has the opportunity to veto the ban. If there\u2019s no veto by the time the review period ends, the ban will go into effect. <\/p>\n<\/div>\n Apple getting a presidential veto would be like lightning striking the same place twice.<\/p>\n<\/div>\n \u201cIt is extraordinarily rare for the President to overturn a decision from the International Trade Commission and in my view, [it\u2019s] unlikely in this particular case,\u201d says Andrei Iancu, a partner at Sullivan & Cromwell LLP, who was also the director of the US Patent and Trademark Office from 2018 to 2021.<\/p>\n<\/div>\n To get a veto, a company usually has to show a public interest or health policy basis \u2014\u00a0and that isn\u2019t the case here. \u201cIt\u2019s unlikely that the import exclusion order will be disapproved by the USTR and the president,\u201d says Smith Brittingham, partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. \u201cThe only real answer would be, \u2018Well, it\u2019s Apple.\u2019\u201d<\/p>\n<\/div>\n That said, Apple did manage to beat the system once. In 2013, then President Barack Obama vetoed an import ban on the iPhone<\/a>. At the time, Samsung accused Apple of infringing on its cellular data patents. But in that case, according to Levi, Apple was able to make the argument that there were issues regarding fair, reasonable, and nondiscriminatory licensing (FRAND). The patents involved were considered standard and essential, and the Obama administration was concerned the import ban would give Samsung \u201cundue leverage.\u201d Plus, it only impacted the iPhone 4 and older models of the iPad. Newer iPhones didn\u2019t use an infringing chipset. In the case of the Apple Watch, Apple doesn\u2019t have any of these arguments. <\/p>\n<\/div>\n \u201cIn that case 10 years ago, Apple really rolled the dice and the pulled the rabbit out of the hat. It\u2019s very unlikely for them to do that again,\u201d says Levi. <\/p>\n<\/div>\n A hail mary veto is unlikely, but that doesn\u2019t mean Apple is just going to accept an import ban on a $17 billion segment of its business<\/a>. Apple spokesperson Nikki Rothberg told The Verge<\/em> in a statement that the company was \u201cpursuing a range of legal and technical options to ensure that Apple Watch is available to customers.\u201d That means the watch is going back on sale one way or another \u2014\u00a0it\u2019s just a question of what path Apple takes.<\/p>\n<\/div>\n Apple has already indicated that it plans to appeal, but appealing is a lengthy process that can take around 18 months. The company will also probably ask for a stay on the import ban, but Brittingham says that\u2019s not likely to be granted because Apple would have to prove that it would be irreparably harmed. In other words, it\u2019d have to make a convincing case that it would go out of business if it can\u2019t sell the Apple Watch.<\/p>\n<\/div>\n While the Apple Watch is a popular product and makes up for roughly 30 percent of the smartwatch market<\/a>, Apple won\u2019t go under if the Apple Watch is out of commission in just<\/em> the US. It\u2019ll hurt to lose such an important market, but it can still sell all three of its Apple Watch models abroad. Similarly, the import ban wouldn\u2019t affect every<\/em> Apple Watch. The entry-level SE<\/a> is unaffected by the ban as it doesn\u2019t have blood oxygen sensing capabilities.<\/p>\n<\/div>\n The SE points to one way for Apple to sidestep the import ban altogether. According to both Brittingham and Levi, Apple could redesign its Apple Watch to avoid the infringed patents until the appeals process is done. Theoretically, all Apple has to do is push out a firmware update that disables the SpO2 sensor and then it could go right back to importing Apple Watches for sale.<\/p>\n<\/div>\n And there are indications that Apple is actively pursuing that option. Bloomberg<\/em><\/a> reports that Apple engineers are scrambling to alter the blood oxygen algorithms on the watches. The report quotes an unnamed Apple spokesperson saying the company plans to submit a workaround to the US customs agency to get the product back on shelves. <\/p>\n<\/div>\nHow Apple got here<\/h3>\n<\/p>\n
But will Biden actually veto?<\/h3>\n<\/p>\n
Where does Apple go from here?<\/h3>\n<\/p>\n