Apple Faces Setback in US Watch Sales due to Patent Dispute

Apple has announced that it will cease the sale of its latest watches in the United States following a ruling that found the company to be in violation of patent rights. The order, which prohibits the sale and import of watches with the disputed blood oxygen feature, is set to take effect on December 26th. Apple plans to appeal the decision but has decided to remove the devices from its US website on December 21st and from its stores in the country after Christmas Eve. While sales in other regions are unaffected, the company has expressed its strong disagreement with the order and is exploring legal and technical options to ensure the availability of the Apple Watch for its customers.
The patent dispute originates from allegations made by California-based medical device firms Masimo and Cercacor, accusing Apple of poaching key staff and stealing technology developed to measure oxygen levels in the blood. Most versions of Apple’s smartwatches, including the popular Series 9 and Ultra 2, have featured the disputed blood oxygen feature since 2020. Notably, the SE model does not include this feature. In October, the International Trade Commission in the US found that Apple had indeed violated some patent rights and issued an order to prohibit the import of certain watches.
Masimo’s CEO, Joe Kiani, viewed the ruling as a “powerful message” that even the world’s largest company is not above the law. However, the International Trade Commission’s order will undergo a 60-day review period by the president, who has the authority to overturn the decision. This review period is expected to conclude on December 25th. Although presidential intervention is uncommon, it has occurred in the past, such as when former President Barack Obama intervened on behalf of Apple in a different dispute in 2013.
Apple has declared its intention to appeal the decision of the International Trade Court and will request a suspension of the order until the appeal is finalized. This patent dispute is part of a larger conflict between Apple and Masimo regarding the oxygen technology. Apple has filed its own claims of patent infringement against Masimo, while a jury trial concerning Masimo’s allegations of theft ended in a mistrial earlier this year.
Following the news of the sales halt in the US, Apple’s stock price experienced a decline of more than 1%. However, analysts anticipate that the timing of this development will not significantly impact holiday sales. Apple’s wearables division, which includes the Apple Watch, has accounted for nearly $40 billion, approximately 10% of the company’s overall sales in the 12-month period ending on September 30th.