By Blake Brittain and Jaspreet Singh, Reuters
Apple watches on display at the Apple Store in Grand Central Station on 18 December, 2023 in New York City. Photo: Michael M. Santiago / GETTY IMAGES NORTH AMERICA / Getty Images via AFP
Apple scored a victory as a US appeals court paused a government commission's import ban on some of the company's popular smartwatches following a patent dispute with medical-technology firm Masimo.
The tech giant had filed an emergency request asking the US Court of Appeals for the Federal Circuit to halt the order after appealing the US International Trade Commission's (ITC) decision that it had infringed Masimo's patents.
Masimo declined to comment on the court's decision, while Apple did not immediately respond.
A final decision could cost either company millions of dollars and potentially force a settlement or some kind of technological workaround by Apple, analysts said. Ultimately, though, any financial hit for Apple is likely to be dwarfed by the bad publicity the lawsuit is generating, they said.
Masimo shares were down almost 4 percent following the decision, and Apple shares were largely flat.
The ITC barred imports and sales of Apple Watches with technology for reading blood-oxygen levels. Apple has included a pulse oximeter feature in its smartwatches starting with its Series 6 model in 2020.
Masimo has accused Apple of hiring away its employees, stealing its pulse oximetry technology and incorporating it into Apple Watches. Apple has countersued, calling Masimo's legal actions a "maneuver to clear a path" for its own competing smartwatch.
"Apple can easily develop their own blood monitoring software, it is just a matter of time ... the software development costs are not something that will be too concerning for a company as wealthy as Apple," said Stuart Cole, chief macro economist at Equiti Capital.
"The bigger issue is that this is not very good PR for Apple, suggesting as it does that Apple is stealing technology from competitors rather than developing its own. Apple is fighting this lawsuit more with an eye on what it means for their future health-wearable products rather than this specific blood oxygen monitoring piece of software," he said.
In a four-paragraph ruling on Wednesday, the appeals court said it would halt the ban while it considers Apple's motion for a longer-term pause during the appeals process. The court gave the ITC until 10 January to respond to Apple's request.
US President Joe Biden's administration declined to veto the ban on Tuesday, allowing it to take effect. Apple asked for a pause of the ban later that day.
Apple has said it is working on a range of legal and technical options.
On Tuesday, the company told the court that US Customs and Border Protection is considering whether redesigned versions of its watches infringe Masimo's patents and can be imported. The customs agency has set a target date of 12 January for its decision, Apple said.
Following the appeals court decision on Wednesday, Apple can sell, for now, the Series 9 and Ultra 2 smartwatches in the US. It had paused sales last week due to the ITC decision. The watches had remained available at other retailers including Amazon, Best Buy, Costco and Walmart .
Contacted by Reuters after the decision, Apple stores on Fifth Avenue and the Upper East Side in New York said they were not yet selling the smartwatches and did not know when they would be available.
The ban did not affect the Apple Watch SE, a less-expensive model without a pulse oximeter. Previously sold watches also were not be affected by the ban.
A jury trial on Masimo's allegations against Apple in California federal court had ended with a mistrial in May.
Apple's wearables, home and accessory business, which includes the Apple Watch, AirPods earbuds and other products, brought in US$8.28 billion (NZ$13bn) in revenue during the third quarter of 2023, according to a company report.
- This story was first published by Reuters.