KEY HIGHLIGHTS
- Sales Pause: Apple to halt sales of Series 9 and Ultra 2 smartwatches in the U.S. due to a patent dispute over blood oxygen feature technology.
- ITC Order Impact: The U.S. International Trade Commission (ITC) order may ban Apple from importing watches, finding a violation of Masimo’s patent rights.
- Presidential Review: President Biden to review the ITC decision until Dec. 25. Apple preempts compliance, pausing sales from Dec. 21 on its website and Dec. 24 in retail stores.
- Sales Impact Timing: Analysts predict minimal impact on holiday sales, with potential repercussions in January and February, typically slower months for Apple in the U.S.
- Global Availability: The Series 9 and Ultra 2 smartwatches will still be available for purchase outside the U.S., including during the Lunar New Year season in Asia.
- Legal Battle: Apple intends to appeal the ITC decision, claiming it was erroneous. Masimo alleges Apple stole its pulse oximetry technology, a claim countered by Apple’s own patent infringement suit in Delaware.
Apple Temporarily Suspends Sales of Series 9, Ultra 2 Smartwatches in US
In a recent development, Apple has announced a temporary halt in the sales of its Series 9 and Ultra 2 smartwatches in the United States starting from this week. This decision is a response to an ongoing patent dispute related to the technology behind the blood oxygen feature in these devices.
The dispute gained momentum in October when the U.S. International Trade Commission (ITC) issued an order that could potentially prevent Apple from importing its Apple Watches due to the violation of medical technology company Masimo’s (MASI.O) patent rights.
As a proactive measure, Apple has decided to pause the sales of the affected smartwatches on its website from December 21, and in Apple retail locations after December 24. However, it’s important to note that other Apple Watch models without the blood oxygen sensor remain unaffected by the dispute.
The U.S. President, Joe Biden, is currently reviewing the decision until December 25. Apple has taken preemptive steps to comply with the ruling if it stands, while the White House has chosen not to comment on the matter.
Analysts suggest that the impact on Apple’s holiday sales may not be immediate, with the full consequences likely to be felt in January and February – historically slower sales months for the company in the U.S. Ryan Reith, the program vice president for IDC’s mobile device tracking efforts, emphasized that Apple has sufficient inventory of Watch 8 and SE to meet demand during this period.
The larger concern lies in the future use of the disputed blood oxygen sensor technology. If the ruling stands, Apple may face challenges incorporating this technology into its future devices. The company holds a substantial share of the global smartwatch market, accounting for about a quarter, according to Counterpoint Research.
Apple contends that the ITC’s finding is flawed and intends to appeal the decision to the Federal Circuit. Meanwhile, Masimo accuses Apple of hiring its employees, misappropriating pulse oximetry technology, and integrating it into the Apple Watch. A previous jury trial on Masimo’s allegations in a California federal court ended in a mistrial in May.
Notably, a U.S. presidential administration has not vetoed an ITC ruling since 2013. The Biden administration’s decision in February not to veto a separate import ban on Apple Watches based on a patent-infringement complaint underscores the complexities of such legal disputes.
Despite the challenges, Apple’s wearables, home, and accessory business, including the Apple Watch, AirPods, and other products, generated $8.28 billion in revenue during the third quarter of 2023, according to the company’s report. The Series 9 and Ultra 2 will continue to be available for purchase outside the United States, including the upcoming Lunar New Year season in Asia.
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Source(s): Reuters
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