Apple Loses at ITC with Apple Watch Import Ban

On Thursday, October 26, the U.S. International Trade Commission (ITC) issued a limited exclusion order (LEO) and cease and desist order against Apple, potentially barring the technology company from importing Apple Watches into the United States. The ITC found Apple violated section 337 by importing Apple Watches that infringed on two Masimo patents that covered technology related to reading blood-oxygen levels.

In January, the ITC issued a Notice of Final Initial Determination (FID) finding that Apple violated Section 337 of the Tariff Act of 1930 by importing and selling in the United States Apple Watches with light-based pulse oximetry technology that infringed claims 24 and 30 of Masimo’s U.S. Patent No. 10,945,648. However, the administrative law judge (ALJ) in the FID found that Apple had not violated Section 337 as to claim 12 of U.S. Patent No. 10,912,501, claims 22 and 28 of U.S. Patent No. 10,912,502, claim 12 of the ’648 patent, claims 9 and 27 of U.S. Patent No. 10,687,745, and claim 9 of U.S. Patent No. 7,761,127.

In Masimo’s complaint filed June 29, 2021, the company claimed that Apple first met with Masimo in 2013 about integrating Masimo’s technology into the Apple Watch and subsequently “began hiring Masimo employees, starting with Masimo’s Chief Medical Officer. In the Fall of 2020, Apple introduced the Series 6, manufactured in Asia.” The sale and importation of the devices infringed Masimo’s patents as well as incorporated Masimo’s trade secrets, which the parties are litigating separately, according to the complaint.

Further, Masimo argued that banning the Apple Watch would not harm public health or welfare because the Apple Watch blood oxygen measurements are actually not reliable and “[s]ome have even observed that the inaccurate physiological measurements of the Series 6 watch endanger public health.”

Pulse oximeters became popular during the COVID-19 pandemic as a way of remotely monitoring patients’ blood oxygen levels. Masimo has also released its own wearable device, the Masimo W1™, which it says is “the first wearable device on the market to provide consumers with accurate, continuous health data, including oxygen level, hydration index, and pulse, heart, and respiration rates.”

In yesterday’s Final Determination, the ITC affirmed the January FID with modifications. In particular, the Commission affirmed with modifications the FID’s domestic industry findings (both economic and technical prong) as to the ’501, ’502, ’648, and ’745 patents; affirmed with modifications the Final ID’s conclusion that the asserted claims of the ’501 patent are obvious, but the asserted claims of the ’502, ’648, and ’745 patents are not obvious; reversed the FID’s finding that Apple proved by clear and convincing evidence that claim 28 of the ’502 patent and claim 12 of the ’648 patent are invalid for lack of written description; affirmed the FID’s claim construction related to the recited term “first shape” and the related conclusion that the Accused Products do not satisfy elements [1B] and [20B] of the ’745 patent; vacated the FID’s finding that the Commission has subject matter jurisdiction over the investigation and instead finds that the Commission has statutory authority over the investigation; and ultimately found that Apple violated section 337 as to claims 22 and 28 of the ’502 patent and claims 12, 24, and 30 of the ’648 patent.

According to reports, an Apple spokesperson said that “Masimo has wrongly attempted to use the ITC to keep a potentially lifesaving product from millions of U.S. consumers while making way for their own watch that copies Apple. While today’s decision has no immediate impact on sales of Apple Watch, we believe it should be reversed, and will continue our efforts to appeal.”

Masimo CEO, Joe Kiani, said in a statement that the ruling “sends a powerful message that even the world’s largest company is not above the law. This important determination is a strong validation of our efforts to hold Apple accountable for unlawfully misappropriating our patented technology.”

The Masimo statement added that “two dozen academic institutions, leading antitrust and intellectual property scholars, physicians, investors, nonprofits, and members of Congress” filed comments in support of the public’s interest in the exclusion order being issued. “These comments conveyed a similar message: to protect innovation, such as Masimo’s technology, and to protect public health, it is necessary to preserve incentives to innovate and protect intellectual property and fair competition.”

Masimo’s statement also quoted the Consumer Federation of America’s comment, which said:

“There is no greater offense to both the antitrust and intellectual property law than when a dominant firm infringes the patent of a smaller rival, who is an actual or potential competitor. In this case, as in the other cases involving Apple’s egregious abuse of market power, the harms far outweigh the benefit. In fact, because competition will swiftly replace any services or products that Apple is no longer able to deliver because of the remedy, there will be little harm and a great deal of benefit for consumers and the economy.”

Apple can appeal the ban to the U.S. Court of Appeals for the Federal Circuit after a 60-day presidential review period.

Image Source: Deposit Photos
Author: ifeelstock
Image ID: 619514286