Apple are facing a major dilemma – cough up millions to Masio, the owners of Sound United whose patented medical technology was stolen for their latest Apple Watch by a former employee and sold to Apple, or cut a plea deal with US President Joe Biden, or alternatively face their Apple Watch being banned in the US, their biggest market

This week a US International Trade Commission (USITC) Administrative Judge in Washington DC ruled that Apple had violated Section 337 of the Tariff Act of 1930 by importing and selling models of their Apple Watch that incorporate light-based pulse oximetry technology that infringes on two of Masimo’s patents.

The proposed ban of the importation and sales of Apple Watches in the US is a decision that is also subject to a 60-day review by President Biden.

If the President allows the ban to go into effect, Apple would have an opportunity to appeal such a ruling, but the USITC – who is seen as experts in these types of disputes – usually finds their rulings upheld.

Apple first introduced the Masimo pulse oximeter sensor technology in their Apple Watch Series 6 in 2020 and continues to incorporate it into models up to the current series.

Well known for their theft of patents, Apple lawyers are also working to prevent the appearance of Apple CEO Tim Cook in a US court to explain his relationship with Masimo’s Former Chief Technical Officer Dr Marcelo Lamego, who was found to have stolen trade secrets from Masimo involving proprietary technology and algorithms for Masimo’s Oxygen measurement technology that ended up in the Apple watch.

If he does, as a judge has ruled, end up appearing in the witness box of a US Court, Cook could well end up being questioned about Apple’s record of stealing other brands patents.

In August 2021, Apple agreed a US$300 million royalty payment payout to Optis Wireless, a group of Companies consisting of PanOptis Patent Management and Optis Cellular and Unwired Planet, after a Court ruled in a case like the latest Masimo ruling involving the theft of patents. The original judgement was for US$506M.

Analysts are already tipping a big payout to Masimo, with their shares rising during the last month buy over five per cent.

Apple shares during the past month have fallen 8.6 per cent.

Mike Matson, an analyst with Needham, noted in a brief to investors that a royalty of just $1-$2 per unit could add as much as US$120 million to Masimo’s annual revenues, and between $0.82 and $1.64 to its annual earnings-per-share.

Matson added that such a royalty agreement could boost Masimo stock values by an additional $25-$50 per share.

In addition to their latest action filed with the USITC, Masimo has separately sued Apple in the Federal Court system on an additional 10 patents it says the tech behemoth has infringed upon.

Apple has responded, claiming, “At Apple, our teams work tirelessly to create products and services that empower users with industry-leading health, wellness and safety features. Masimo is attempting to take advantage of these many innovations by introducing a device that copies Apple Watch and infringes on our intellectual property, while also trying to eliminate competition from the market”.