As Apple Watch Faces Ban, Masimo Boss Prepared To Negotiate
Masimo the owners of the former Sound United, are heading to a big payday, after winning a ruling that at this stage will see Apple watches banned from being shipped into the USA the biggest for the iPhone maker.
Masimo founder and CEO Joe Kiani, is in a strong position as he negotiates a settlement with Apple, who basically stole technology from the big medical Company, who next year plans to launch their own watch in Australia housing the Oxygen measurement technology that Apple so desperately needed, for their Apple watches.
When they realised that they could not develop an Oxygen measurement system themselves, they simply stole it from Masimo.
Masimo has already spent $65M fighting the big iPhone maker, in what appears to be a normal modus operandi for Apple, steal a patent and or technology, squeeze the brand that owns the patent, forcing them to spend millions on legals, and hope that the billions Apple have in the bank at frightens a brand to surrender.
The only problem is that Apple keeps losing patent theft cases bought against them, no more so than when they took on Masimo a business run by Joe Kiani who failed to give in despite a couple of stumbling blocks along the way.
Last week the International Trade Commission issued an order to halt the importation of certain Apple Watches into the United States handing a major win to Masimo.
At the heart of the fight was Masimo’s pulse oximeter, a blood oxygen sensor that has become a key selling point for premium smartwatches and fitness trackers, Apple didn’t have one, so they simply stole Masimo’s technology.
The Commission sided with Masimo that Apple infringed on two patents related to the pulse oximeter, and the ban would prohibit certain Apple Watches that include the sensor (first introduced in the Series 6 in 2020) from being imported into the United States.
It also includes a cease-and-desist order that stops sales of infringing products already in the country.
The import ban is now subject to a 60-day presidential review and, barring intervention by the Biden Administration, is slated to go into effect on Xmas day December 25.
Apple said it plans to appeal the decision.
Kiani is punting on the ITC decision “might speed things up” and push Apple towards a settlement agreement.
The only problem is that Kiani has already said that he won’t accept a cheque for a licensing deal from the $2.7 trillion tech giant to keep selling its existing pulse oximeter product as-is.
Kiani said Masimo’s technology either needs to be incorporated into the Apple Watch, or he would work with Apple on “theirs till it’s good enough to have Masimo’s reputation behind it.” taking a royalty payment along the way.
The drama for Masimo unfolded after he first met with Apple in 2013 as one of 28 companies discussing the possibility of including health sensors in future versions of the Apple Watch.
And like on so many other occasions Apple used the meeting to engineer a way to basically get the technology without paying Masimo.
According to evidence put before a US court, Apple poached his employees who had worked on the technology, stole trade secrets, and infringed on Masimo’s patents.
“It is a big deal for Masimo because this is not something Apple can just sweep under the rug or ignore.” claims Kiani.
At this stage Apple is punting on convincing the Biden administration to veto the ruling between now and Christmas day when the ban would go into effect while the appeals process plays out in federal court.
“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,” spokesperson Fred Sainz said in a statement.
Forbes reports that “It is a big deal for Masimo because this is not something Apple can just sweep under the rug or ignore,” John Presper, counsel at Foster, Murphy, Altman & Nickel, who isn’t involved in the litigation but represents clients before the Commission. “Masimo is in a much stronger position now,” he said, because one of Apple’s previous tactics – trying to convince the Patent Trial and Appeal Board to invalidate Masimo’s patents central to this dispute – has already failed.
A presidential veto of an International Trade Commission ruling is exceedingly rare, said Presper. However, the most recent veto by then President Barack Obama in 2013 involved a dispute between Apple and Samsung that was decided in Apple’s favour.
Before that, the last time a president intervened was during the Reagan and Carter administrations.
This is the second time in less than a year that the Commission has issued an import ban related to Apple Watches.
US Company AliveCor, which uses artificial intelligence and sensors for continuous heart rate monitoring, secured a ban in December 2022.
President Joe Biden declined to intervene, but the ban was put on hold because Apple had managed to get the underlying patents invalidated. Apple and AliveCor have both filed appeals cases winding through federal court. Priya Abani, CEO of the $850 million startup, told Forbes AliveCor’s case “represents every small company and every future innovation that is at risk of being suppressed by a goliath.”
One issue that could come into play is that Kiani and his family are big Democrat supporters and have in the past given at least $2 million to political action committees affiliated with President Biden’s election campaign in 2019 and 2020, according to Federal Election Commission filings.
“I really love our president,” Kiani told Forbes recently.
However, he did dismiss the idea that his campaign donations posed a conflict. “I think the administration has been trying to curb in Big Tech.”
The Commission had asked Apple “how easily” the infringing features could be removed from its watches and if the company was working on a redesign earlier this year. The response from Apple’s legal team in a June 2023 legal filing was almost entirely redacted, apart from: “It is impossible to say with certainty what actions Apple would take with respect to a redesign” before the Commission issues its final ruling. An Apple spokesperson did not respond to a request for further comment.
Kiani said he would also be “fine” with Apple instituting a redesign, rather than a settlement agreement. “Not everything is about financial gain,” he said. He quickly clarified, however, that his company would still pursue a financial settlement in federal court to recoup Masimo’s losses for past infringement.