Dive Brief:
- The U.S. International Trade Commission (USITC) on Thursday issued a limited exclusion order against Apple in the patent infringement complaint brought by Masimo, recommending the tech giant “cease and desist” from importing and selling its Apple Watches with pulse oximetry functionality.
- “This important determination is a strong validation of our efforts to hold Apple accountable for unlawfully misappropriating our patented technology,” Masimo founder and CEO Joe Kiani said in a statement. Kiani, who co-invented the technology for measuring blood oxygen levels, faced a proxy battle earlier this year over the company’s direction that ended with the seating of two directors nominated by an activist investor.
- With the USITC’s investigation concluded, the case now goes to the Biden administration, which has 60 days to review the order.
Dive Insight:
The trade commission’s final decision in its investigation of the complaint initiated by Masimo over patents for light-based technology to measure blood oxygen saturation could stop Apple from importing models of its wearable electronic devices with the feature.
“To us, without question, this outcome represents a favorable and positive step forward in Masimo’s ITC case against Apple … though it’s not the final step,” Stifel analyst Rick Wise wrote in a note to clients Thursday. The analyst suggested Apple might have several options, including entering a royalty arrangement with Masimo, removing the infringing Apple Watches from the market, or manufacturing the devices in the U.S.
Apple, in an emailed statement, said, “Masimo has wrongly attempted to use the ITC to keep a potentially life-saving product from millions of U.S. consumers, while making way for their own watch that copies Apple.”
Apple said the decision would have no immediate impact on sales of the Apple Watch. The company said it will appeal the ruling in the federal circuit court.
Irvine, California-based Masimo accused Apple of stealing its trade secrets and incorporating the technology into the Apple Watch, although a lawsuit brought by Masimo in California federal court ended in a mistrial in May. Masimo has said it would pursue a retrial of that case.
Apple has also sued Masimo for patent infringement in federal court in Delaware.
Kiani, in Masimo’s statement on the USITC ruling, said the trade commission’s finding “sends a powerful message that even the world’s largest company is not above the law.”
Masimo in July announced a cost-cutting plan for the second half of the year after delayed hospital orders and weak demand for its consumer products hurt revenues. The company paid $1 billion last year to acquire Sound United and its luxury audio brands, prompting the proxy fight led by activist shareholder Politan Capital Management.