Apple faces a scenario where it may not be able to bring Apple Watches into the U.S. after the International Trade Commission ruled on Thursday that the company’s wearable infringed on patents owned by medical technology company Masimo.
Masimo claims that the Apple Watch violates its patents related to light-based technology for reading blood-oxygen levels, one of the key features of newer models. The U.S. ITC agreed with the Irvine, California-based company, setting up the import ban.
A ban would be a blow to Apple, which counts on the Apple Watch for a decent chunk of its revenue. In the company’s fiscal third quarter report, the wearbles segment, which includes the Watch, generated $8.28 billion, or a little more than 10% of its total sales. More importantly, the Watch also serves as one element of the Apple ecosystem of products that seamlessly work together.
The White House’s U.S. Trade Representative has 60 days to review and veto the ruling, although that’s historically rare. If that doesn’t happen, Apple could appeal the ban to the U.S. Court of Appeals for the Federal Court.
Apple said it disagreed with the ruling and will seek to reverse it.
“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,” said an Apple spokesperson. “While today’s decision has no immediate impact on sale of Apple Watch, we believe it should be reversed, and will continue our efforts to appeal.”
A Masimo spokesman wasn’t immediately available to comment.
Patent disputes often go through the ITC because the threat of a ban typically motivates the parties to hammer out a licensing agreement. While some ITC rulings do end up banning products from entering the U.S., companies more often resolve their disputes, negating the decisions.
While the Apple Watch is designed in California, it’s manufactured in China and needs to be shipped to the U.S. to reach retail stores. In the highly unlikely scenario where the ruling stands and the two companies don’t come to an agreement, that could effectively wipe out Apple Watches from U.S. stores. But that’s not a situation that will happen anytime soon given the White House review and options for appeal by Apple.
The technology that Massimo is challenging relates to a key feature of the Apple Watch, with the company positioning its wearable as a life-saving device. Features like the blood-oxygen sensor, while not necessarily an everyday need, is important to Apple’s effort to push the Watch as not just another accessory, but one critical to your health.