Apple Beats Masimo Bid to Revive ‘Secret’ in Clash on Watch Tech

Masimo Corp. failed to convince a federal judge to throw out his finding that business methods it claims Apple Inc. stole don’t qualify as trade secrets, a setback in their broader battle over patented smart-watch technology that measures the amount of oxygen in the blood.

Judge James V. Selna rejected Masimo’s argument that his ruling on its alleged trade secret, dubbed “B2,” “was based on manifest errors of law and fact and a manifest failure to consider material facts.” Masimo filed the motion in May, after a jury in Santa Ana, Calif., deadlocked, unable to decide whether Apple stole the medical device company’s trade secrets to craft the Apple Watch’s blood-oxygen sensor.

Selna also deferred ruling on Apple’s request for a judgment barring Masimo’s claim of trade-secret theft because Masimo “unjustifiably delayed for six years” before suing,” according to the second of two Aug. 4 rulings, which had redacted versions docketed Monday in the US District Court for the Central District of California.

In punting his decisions on the competing motions about Apple’s defenses, Selna said he must wait “until a jury returns factual findings on the intertwined statute of limitations defense.” He denied Masimo’s bid for judgment on Apple’s defenses of laches and waiver but said he’d “consider the issues together after a verdict is reached.”

Selna said “a trade secret plaintiff may not defend against challenges to its trade secret by arguing that a further ‘secret’ lies behind the alleged trade secret as defined and disclosed and that further secret is what has been misappropriated.”

He said the ruling Masimo challenged “rests on a failure of proof by Plaintiffs” to offer “substantial evidence on which a reasonable jury could rely to find that B2 as defined and disclosed” wasn’t generally known. The ruling, Selna said, “construes all reasonable inferences” in Masimo’s favor “and disregards the competing evidence presented by Apple.”

Sprawling Legal Fight

The companies are embroiled in a sprawling legal dispute over various functions and designs for smartwatches, with the most heated battles centered on technology for using light sensors to measure the amount of oxygen in the blood.

The medical device company sued Apple in January 2020 for allegedly developing its smart-watch sensor using trade secrets acquired when Apple poached a number of employees from Masimo and Cercacor Laboratories Inc., a Masimo spinoff.

Last week, Apple urged the US Court of Appeals for the Federal Circuit to uphold an administrative tribunal’s decisions canceling parts of 13 pulse-oximetry patents Masimo alleges certain Apple Watch models infringe.

Apple and Masimo also are dueling over watch-related patents in another federal court and at the US International Trade Commission, which has the power to block imports of products that infringe US patents.

In January, an ITC judge said the Series 6 Apple Watch infringes a Masimo patent. The full commission is reviewing the decision and last month extended the target date for its final determination to Oct. 10.

Last October, the Cupertino, Calif.-based tech giant sued Masimo twice in the US District Court for the District of Delaware, alleging in patent-infringement complaints that Masimo “hastily developed” its W1 watch as part of a “nefarious potential strategy” to bump the Apple Watch from the market “and make way for Masimo’s own watch.” A trial date hasn’t been set, but a joint claim-construction hearing is scheduled for Sept. 14 in Wilmington.

Knobbe Martens Olson & Bear LLP represents Masimo and Cercacor.

Wilmer Cutler Pickering Hale & Dorr LLP; Lewis & Llewellyn LLP; Pillsbury Winthrop Shaw Pittman LLP; Haynes & Boone LLP; and Gibson, Dunn & Crutcher LLP represent Apple.

The case is Masimo Corp. v. Apple Inc., C.D. Cal., No. 8:20-cv-48, redacted orders filed 8/14/23.