Apple Files Emergency Request to Appeals Court to Halt Ban
UPDATE: See the latest news that broke the day after this story was posted at the bottom of this story…
The Masimo vs. Apple saga continues as the ban on Apple Watch models that the U.S. International Trade Commission (USITC) declared infringed on multiple Masimo Corp. (NASDAQ: MASI) patent claims is now in full force as the Biden Administration declined to veto the USITC decision. Apple’s (NASDAQ: AAPL) hopes for a presidential intervention countermanding the USITC ban from taking effect were dashed as the Presidential Review period expired at the end of Monday – yes, Christmas Day – with no action taken by the White House.
Speaking for the Biden Administration Tuesday morning, Katherine Tai, the U.S. Trade Representative said the government “decided not to reverse the ban following careful consultations.” With that, the Apple Watch ban took full effect.
See more on what happens now in this Masimo vs. Apple patent battle
With no Christmas miracle to save its Masimo patent-infringing Watch models, on Tuesday morning Apple filed an emergency request to the U.S. Court of Appeals for the Federal Circuit asking them to overturn the USITC ban, according to the Reuters News Agency. Apple has also asked the Court to stay or pause the ban while it appeals the ruling.
Apple Asks Appeals Court to Pause the USITC Watch Ban While It Appeals the Ruling
Also, Apple notified the court that it has supplied “redesigned versions of its watches” to the U.S. Customs and Border Protection agency that the company says no longer infringes on the Masimo patents. This is yet another reason that the tech giant would like the ban paused until the CBP rules on whether its modifications eliminate the infringement. Apple says the CBP decision could come as soon as January 12th.
Masimo retorts that Apple’s redesign is nothing more than some software adjustments, while the Masimo patents they infringed upon involve actual hardware. They suggest that it is not possible to fix the infringement of hardware technology with a software adjustment.
Apple Previously Requested a Pause on the Ban from the USITC, Which Denied Its Request
Last week, in anticipation of the need to appeal the USITC ban, Apple requested that the agency pause the imposition of its ban to allow Apple the time to pursue its appeal. Unfortunately for Apple, the USITC denied its request.
We strongly disagree withthe USITC decision and resulting exclusion order, and are taking all measures to return Apple Watch Series 9 and Apple Watch Ultra 2 to customers in the U.S. as soon as possible.Apple, in a prepared statement released on Tuesday
The USITC Files Papers with the Court in Opposition to Apple’s Appeal
Not only did the U.S. International Trade Commission deny Apple’s request to suspend implementation of the ban while it seeks to appeal, but the Commission actually filed its own papers with the U.S. Court of Appeals for the Federal Circuit in opposition to the Apple appeal.
Apple announced last week that it would preemptively remove the offending Watch models from sale at its webstore and physical retail stores, with all sales stopped by December 25th. But a second look at the Apple website showed that those models, the Series 9 and Ultra 2 versions – its two newest Watch versions – remained on its website…only now baring the mark “Currently unavailable.” Was Apple deliberately keeping them displayed in case it won a reversal of the USITC ban?
Some Retailers are Still Selling Apple Watch from Existing Internal Inventory
For the time being, Apple Watch Series 9 and Ultra 2 are still available from certain retailers like Best Buy, Walmart, and Amazon which are selling out their inventory. Unless Apple wins a reversal of the USITC decision, however, these retailers will not be able to replenish their Watch inventory when it runs out.
The company did make some changes to the Watch product page on its website, such as moving its SE series to the top of the page. But it left both the Series 9 and Ultra 2 models on the page with the words “Currently Unavailable” prominently displayed. To my eyes, this only serves to highlight the impact of the forced removal of its two most recent Watch model introductions. While the company moved its Watch SE to the top of its Watch product page, this is an older model without pulse oximetry capabilities that has been in its lineup for quite some time.
In the meantime, I can’t help but notice the intransigence of Apple who has legitimately lost a pitched patent battle with Masimo but refuses to negotiate a royalty payment with them. Instead, the tech behemoth is attempting to design around the infringement, and barring that, actually pulling the models from the market – during a key selling season for the popular product.
A Temper Tantrum? The Unique Tactic of Apple and Google
This seems quite unique in our industry and an unusual temper tantrum by a company that is apparently unaccustomed to not getting its way. It reminds me very much of a similar dispute, Sonos vs. Google, where, upon losing its bid with the USITC and being declared an infringer on certain Sonos patents, Google used a firmware update to disable certain capabilities of its smart speakers to get around the patent violation, rather than negotiating some type of licensing or royalty payment to Sonos.
That tactic seemed quite petulant at the time. But now we’re seeing it again. Here is Apple, one of the richest, most profitable companies in the world, which can clearly afford a reasonable royalty payment, choosing instead to either pursue more costly litigation, or a specious plan to design around the Masimo patents – all to avoid giving Masimo a win on royalties.
IP Attorney: What’s Unique is that ‘Apple has Chosen to Live with the ITC Order Rather than Settle’
There’s nothing legally extraordinary about the ITC issuing an exclusion order. What’s extraordinary here is that the product at issue is high profile and that Apple has chosen to live with the ITC order rather than settle.Nicholas Matich, Intellectual property attorney with McKool Smith to Reuters
Investment advisory firm Stifel said in a note to investors that its litigation experts predict that Apple’s appeal would end up causing an extension of the ‘final’ USITC verdict (the ban) for at least another full year. That is, unless it can convince the Appeals Court to suspend the ban. However, industry analysts appear skeptical that Apple will prevail in its attempt to get the Court to pause or overturn the ban.
Masimo Says They are Open to Negotiations with Apple, But Haven’t Heard From Them
Several news outlets, including Reuters and CNN, have spoken with Masimo CEO Joe Kiani who said that Masimo remains open to discussions with Apple on a negotiated solution to the situation, but has yet to hear from them.
Learn more about Apple by visiting apple.com.
See all that Masimo has to offer at masimo.com.
UPDATE – December 27, 2023
On Wednesday, the day after this story was posted, the United States Court of Appeals for the Federal Circuit granted Apple, Inc.’s emergency request for a stay (pause) of the ban on two Apple Watch models. This was a very quick decision by the court, and many have misinterpreted just what it indicates.
The stay granted by the Court of Appeals is not based on the merits of the case…and it is only a temporary stay. It is not uncommon for the court to issue such a temporary stay to give themselves time to get up to speed on the issues of the case.
As such, the court will consider extending the stay, but only after having heard arguments from all of the parties, including the United States International Trade Commission and Masimo, Inc. Both of those parties have been given until January 10 to file their arguments as to why the stay should be lifted.
Furthermore, Apple has been given until January 15 to file their reply to those arguments. The Court will makes its ruling sometime after those filings.
Still, it does mean that Apple can continue to sell all Apple Watch models until then.