What would a trade ban mean for the Apple Watch?

Last week’s ruling, by the International Trade Commission (ITC), that Apple had violated patent rights held by medical technology company Masimo has some people worried that they’ll have a hard time buying an Apple watch this holiday season. Apple, though, says there’s no reason to worry.

The ruling, which upheld a judge’s decision in January, could result in a ban that stops Apple from importing its Apple Watches into the U.S.

Apple has said it plans to appeal the decision—and issued a statement following the verdict saying, “Masimo has wrongly attempted to use the ITC to keep a potentially lifesaving product from millions of U.S. consumers while making way for their own watch that copies Apple. While [this] decision has no immediate impact on sales of Apple Watch, we believe it should be reversed, and will continue our efforts to appeal.”

Masimo’s CEO Joe Kiani called Apple’s statement “loaded and so outrageous” in a CNBC interview the day after the ruling.

Curious about what it all means and how it might impact your holiday gift giving? Here’s a look at what’s going on.

What’s the issue?

The patent battle surrounds pulse oximeters, a technology that reads blood oxygen levels. That’s a key selling point for premium watches, like Apple’s. Apple first introduced the feature in the Series 6 in 2020, but Masimo says the company stole the idea after the two met in 2013 to discuss including health sensors in later versions of the Apple Watch. (Some 27 other companies were included in those talks.)

Kiani has accused Apple of poaching his employees and infringing on his company’s patents, which Apple denies. This all comes about as Masimo is entering the consumer tech market, selling its own watches with blood oxygen monitoring capabilities. (The company has historically focused on larger health systems as its customer.)

Will I be able to buy a new Apple Watch this holiday season?

You will. Even with the threat of a ban, the ruling won’t go into effect until December 25. And that could be delayed even further with appeals or a veto on the ruling (see below).

So there shouldn’t be any impact to holiday sales.

Will there be an import ban of Apple Watches down the road?

That’s the bigger question. The ITC ruling would prohibit the U.S. import of Apple Watches that include the sensor, but it stopped short of specifying exactly which models of the Apple Watch would be affected. There’s also an order that would stop sales of those products here that are already in the country.

Apple can—and says it will—appeal the import ban once the 60-day review period ends, which would likely stop the prohibition from going into effect. (The company says it plans to appeal the U.S. Federal Circuit Court.) And even if it loses that, the two companies can reach a settlement. So, don’t expect there to be a shortage of Apple Watches anytime soon.

How does President Biden factor into this?

Remember that 60-day review period? That’s so the Biden administration, specifically the U.S. Trade Representative, can decide whether to veto the import ban based on policy concerns. That’s highly unlikely to occur, however.

Is this the only patent dispute the Apple Watch is facing?

It’s not. California-based AliveCor is also in a patent battle with Apple over Watch technology surrounding electrocardiogram (ECG) technology. The ITC, last December, ruled in favor of AliveCor—and that ruling, too, could lead to an import ban. (Biden declined to veto that after the review period.) However, that ban is on hold while AliveCor appeals a December 2022 ruling by the U.S. Patent and Trademark Office finding that three of the company’s patents are invalid.

Can’t Apple and Masimo just get along?

Of course, but it might be a while. Both companies are hoping the appeals court rules in their favor. And Apple, in October of 2022, filed two patent infringement lawsuit against Masimo over that company’s watch, noting it appeared to include several features patented by the Apple Watch.

But, should the courts rule against Apple, the company could work out a licensing agreement to use Masimo’s patents in its product. Kiani has signaled he’s open to that, telling CNBC: “If we can work with Apple to . . . use our technology, I am willing to do it.”

https://www.fastcompany.com/90977469/what-would-a-trade-ban-mean-for-the-apple-watch?partner=rss&utm_source=rss&utm_medium=feed&utm_campaign=rss+fastcompany&utm_content=rss