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Apple Forced to Halt Sales of the Apple Watch Series 9 and Ultra 2

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.

The Biden administration has opted not to veto an import ban on Apple Watch Series 9 and Ultra 2 arising out of a patent dispute with medical technology company Masimo Corp over blood oxygen sensing technology.

Last week, Apple pre-emptively halted sales of the affected watches starting this week after the US International Trade Commission ruled in favour of Masimo in October with an exclusion and a  
cease-and-desist order. The Biden administration’s 60-day Presidential Review Period — during which President Joe Biden or the US Trade Representative had the opportunity to veto the ban — expired on 25 December.

“You can’t simultaneously say, this is going to be the end of the world if the ITC exclusion order stays in place, and then, in essence, injure yourself by withdrawing the product from the market,” said Scott Daniels, an attorney at Xsensus Law who specialises in ITC litigation and a former attorney at the general counsel’s office at the ITC.

The affected watches were unavailable to order from Apple’s website in the US after 3:00pm EST on December 21 and were unavailable in Apple retail locations after 24 December. The lower-end SE watch will still be available.

An unsurprising decision

The Biden administration upholding the ITC ruling shouldn’t come as a surprise as a presidential veto is usually rare. The last time it happened was in favour of Apple but under different circumstances. In 2013, former President Barack Obama vetoed an import ban after the ITC ruled that iPhones and iPads infringed on Samsung’s cellular patents.

In that case, Apple was able to successfully argue that there were issues with how companies like Samsung license SEPs on FRAND terms. The Obama administration was concerned the import ban would give the South Korean company “undue leverage”.

In the case of US-based Masimo, the blood oxygen sensors on consumer wearables like Apple Watches are for wellness purposes, not medical. Rumoured updates, like sleep apnoea detection, which relies on blood oxygen sensing technology, could give Apple a stronger case but the technology alone isn’t enough. “There are plenty of non-infringing alternatives for consumers desperate to get an oximeter, and that weighs very heavily in favour of the President not to veto an order,” said Daniels.

In February, Biden also declined to veto an ITC import ban and cease-and-desist order regarding a patent dispute initiated by AliveCor over the Apple Watch’s EKG features. Apple, though, wasn’t impacted because it successfully challenged the medical company’s patents before the Patent Trial and Appeal Board. AliveCor would need to win its appeal for the ITC ruling to have any effect.

Apple has appealed the ITC ruling in the Masimo case. The ITC last week denied Apple’s motion to temporarily stay the import ban while the case is under appeal.

The road ahead

While Apple has decided to appeal the ITC ruling, the process is usually long-winded. Scott Daniels estimated that it could take until the middle of 2025 before the court issues a decision.

The Federal Circuit Court of Appeals is also historically more likely to affirm decisions from the ITC, according to Daniels.

“The statutory review standard is a little more lenient when the decisions come from an agency of the government as opposed to from a court because it’s always assumed that the agency knows what it’s doing,” he said. “The Federal Circuit is also more impressed with ITC decisions. District court decisions tend to be kind of abrupt, short, and not very analytical. ITC judges and the commissioners handle patent cases all the time and are not distracted by a criminal docket or a big antitrust case that requires the district court’s attention.”

Aside from the appeal, Apple could also attempt to tweak the watch with a software update. However, Bineet Bhasin, VP of IP Strategy & Technology at UnitedLex, says it’s unlikely to solve the infringement issue as the claims are hardware-specific.

“Apple will likely have to make hardware design changes which are significantly more cost and time-prohibitive,” he said. “Looking specifically at Claims 22 and 28 of US10,912,502, Apple’s accused smartwatches have been shown to meet each claim limitation related to hardware-specific elements for blood oxygen measurement. Because the language of the patent broadly relates to hardware design for this capability, a software update that relies upon the infringing hardware won’t resolve the issue.”

Apple could avoid the import ban by moving manufacturing to the US, but that would introduce a host of legal and business challenges — including wilful infringement – which can lead to enhanced damages.

A settlement is the likeliest option, but a lot depends on the cost-benefit analysis of the current situation, according to Bhasin.

“Apple could discontinue the two Apple Watch models in violation of the patents but would have to consider the financial impact of either replacing them with a new, non-infringing model or reverting back to a previous, non-infringing model,” he said. “Existing inventory would go to waste; new product development could be significant.”

Resource: Biden dashes Apple’s hopes of import ban intervention – IAM (iam-media.com)

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