Apple Pause on Holiday Watch Sales Shows Legal Bind It Faces
Apple Inc.'s plan to halt online sales of its smartwatch four days before Christmas to comply with a regulator's order shows that it's in a legal jam.
The company has known for almost two months that a ban imposed by the International Trade Commission would take effect Dec. 25 unless it persuaded the Biden administration to intervene — or worked out a settlement with Masimo Corp., the medical device maker that accused it of copying patented technology for measuring blood-oxygen levels.
The iPhone maker now is racing to make software fixes in a work-around effort to get the product back on the market next year and salvage the $17 billion business generated by its smartwatch sales. The company's preparations to pull a big moneymaker off the market in the busy holiday season signals that its prospects for relief from the ban are dwindling.
Intellectual property lawyer James Gagen said it's striking that in its long-running dispute with Masimo, Apple hadn't begun the process of obtaining approval for alternative designs earlier or made other arrangements to avoid a halt in sales.
“Normally we would want to have a fallback position so that we could ensure continued supply,” said Gagen, of the firm Allen & Overy LLP.
Patent disputes of the sort that arose between Masimo and Apple in 2020 typically settle before they get to the point where one side is facing a potential sales ban. In this case, Masimo's allegations of wrongdoing ran deeper than patents: The Irvine, California-based company accused Apple of poaching its employees and stealing trade secrets worth billions of dollars — which the iPhone maker denied. A jury trial this year ended in a stalemate.
Apple could still settle with Masimo, though that's a route the Cupertino,
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