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An Update and Possible Solutions in the Apple Watch Saga

Nisha Shetty, a journalist with IAM Media, talked with Bineet Bhasin, VP of IP and Strategy at UnitedLex, as a trusted source for an article on Apple’s patent legal issues involving the recently released Apple Watch Series 9 and Ultra 2. Read the excerpt below to see what they discussed.

Even among tech companies, where there is an obsession with secrecy, Apple Inc stood out. Stories about prototypes being transported around the office under a black cloth are well-known.

“They had a policy that you could bring your children to work if they were under the age of two,” a former employee told me. “Anyone older was considered a security risk.” An ex-employee described the company as being “so siloed” that what employees on other teams did was kept a mystery. Another former employee said it was the most intensely private company he ever worked at, “and I worked for the Department of Defense”.

However, allegations made by Masimo Corp raise questions about the company’s approach to the secrets of others.

In 2013, the tech giant met Masimo for a potential collaboration to incorporate its pulse oximetry technology into the Apple Watch, according to the complaint filed by Masimo and its sister company Cercacor Laboratories Inc in the US District Court for the Southern District of California.

Masimo alleged that after talks fizzled out, Apple hired many of its employees, including Cercacor chief technical officer Marcelo Lamego who was named on several Apple patent applications for sensors related to measuring blood oxygen. Apple said it has strict policies to ensure new employees don’t share confidential information from prior employers.

But when Apple launched its Series 6 watches, introducing the Blood Oxygen app, Masimo took action. It sued Apple for patent infringement, trade secret misappropriation, correction of inventorship and ownership of patents.

The case ended in a mistrial but the dispute is far from over. Apple challenged the validity of Masimo’s patents at the Patent Trial and Appeal Board. Masimo turned to the US International Trade Commission and it ruled Apple had infringed two patents, resulting in an import ban on the Series 9 and Ultra 2 watches. Apple appealed but in the interim, it redesigned its software to disable the blood oxygen technology. It also filed two suits in district court against Masimo for patent infringement, following the medical technology company’s launch of its own health-tracking watch.

At IAM, we looked at the many moving pieces of the Apple Watch saga and how things could play out….

The software fix

Apple CEO Tim Cook has an excellent poker face. He looked unbothered as ever during a broadcast with CNBC in February as he explained that Apple was “focused on the appeal” and that customers had “lots of reasons to buy the watch even without the blood oxygen sensor”. The company was able to continue selling its watches because it redesigned its software, disabling the infringing feature.

Cook’s comments also indicate that Apple is no mood to settle and take a licensing deal from Masimo. Not yet, anyway.

“Apple’s cost-benefit analysis looks different,” said Paul Bartkowski, a partner at Bartkowski. “It seems that they are telling the world through their actions in this case that not only do you need to win at the PTAB, at the ITC, at the district court, you need to go all the way through to the Federal Circuit. Several years, and millions of dollars – that’s what it’s going to take to get paid.”

Apple requested the exclusion order enforcement branch at US Customs and Border Protection for an administrative ruling on the redesigned watches on 27 October 2023 under a Rule 177 proceeding, according to a ruling letter from Dax Terrill, chief of the exclusion order enforcement branch. These proceedings before Customs are usually resolved quickly, where as similar options before the ITC, such as seeking an advisory opinion or a modification to an import ban, are known to take longer.

During the proceeding, Apple provided Masimo with the source code of the redesigned watches and samples to inspect during the procedure. Though Masimo raised concerns about the blood oxygen sensor being accessible when paired with jail broken iPhones (which are customized to eliminate some settings and install non-Apple software), the exclusion order enforcement branch ruled in January that the watches were not infringing without that modification and, thus, no longer subject to the import ban.

The hardware challenge

While software changes take only hours to execute, according to former Apple employees, it is, at best, a short-term solution.

If Apple wants to redesign its watches to include a blood oxygen sensor, it will likely have to change the hardware as the patent claims on which the ITC decided to issue the import ban are hardware-specific, said Bineet Bhasin, vice-president of strategy and technology at UnitedLex. “Those changes require reengineering, which can be costly and time intensive,” he said.

Apple may be focusing on its appeal, but it is all but certain that its engineers are working on a hardware redesign that does not infringe Masimo’s patents and would eliminate the need to sign a licensing deal. A software tweak would also be necessary to enable the blood oxygen sensors that were disabled.

However, Apple must answer one big question first: financially, is it worth fixing the existing generation watch or should it wait to make changes on the next generation watch? A former Apple employee says making changes to an existing watch could take two to three months, but it would make more sense to implement the changes in a next generation watch. The first step of the process is to have an alternative design…

Go here to read the complete article by Nisha Shetty, Reporter for IAM.


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