Apple Calls Masimo Smart Watch Damages Bid ‘Utterly Theoretical’

Apple Inc. urged a federal judge to block Masimo Corp. in their trade-secrets retrial from seeking a portion of Apple Watch profits allegedly tied to technology that measures the amount of oxygen in the blood.

Masimo and Cercacor Laboratories Inc., a Masimo spinoff, “do not even attempt to show” that four purported trade secrets “were singled out by Apple as particularly vital to Blood Oxygen,” Apple said in a court filing Tuesday in the US District Court for the Central District of California. The filing was in support of Apple’s motion for a ruling of no unjust enrichment.

“Their only evidence” about the importance of a fifth claimed trade secret, the Cupertino, Calif.-based tech giant said, “is the same single slide from a single 2018 presentation, but Plaintiffs identify nothing suggesting that Apple viewed that one tiny aspect of Blood Oxygen as particularly important.”

On Monday, the US Court of Appeals for the Federal Circuit handed Apple a victory, affirming a series of tribunal decisions that mostly invalidated five Masimo patents.

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.

Masimo 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.

On May 1, Judge James V. Selna declared a mistrial after a jury in Santa Ana, Calif., deadlocked, unable to decide whether Apple stole the medical device company’s secrets to craft the pulse-oximetry sensor introduced with the Series 6 Apple Watch.

In late August, after Selna prodded the parties to renew their settlement talks, they told the judge that they had agreed to another mediation before Judge Layn R. Phillips. The “mutually-convenient date,” they said, should come after Selna rules on Apple’s motion for a finding of no unjust enrichment, and after a US trade agency issues its final decision in the parties’ parallel dispute there.

Apple and Masimo also told the judge they’re available for the new trial on May 21, 2024.

‘Scattershot Documents’

Before declaring a mistrial, Selna instructed jurors that Masimo must show the alleged misappropriation was a “substantial factor” in causing the unjust enrichment they seek, Apple said Aug. 21 in its supplemental Rule 50(b) motion. Under that standard, Apple said, no reasonable juror could have concluded Masimo met its burden.

The “vast majority of the scattershot documents Plaintiffs cite have nothing to do with the Blood Oxygen feature in the first place,” Apple said. The documents also “indisputably predate Apple’s development of that feature, which began in ‘November, December of 2014.’”

Masimo said in a Sept. 5 filing that Apple “pursued Masimo—the undisputed leader in pulse oximetry—to develop Apple’s blood-oxygen feature.” Apple, Masimo said, then hired a specific employee, stole Masimo’s trade secrets for measuring blood oxygen, “and used the technology in its blood-oxygen feature. A reasonable jury would be free to find that the trade secrets made a substantial contribution to the value of Apple’s blood-oxygen feature.”

“The ‘mere possibility’ that the purported trade secrets enriched Apple—which in this case is utterly theoretical, given the complete absence of causal evidence—fails as a matter of law to support unjust enrichment,” Apple responded in Tuesday’s filing.

In January, a judge at the US International Trade Commission said the Series 6 Apple Watch infringes a Masimo patent. The full commission is reviewing the decision and extended the target date for its final determination on whether to ban imports to Oct. 10.

The parties also are dueling over watch-related patents in another federal court.

Last October, Apple sued Masimo twice in 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 Thursday 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, reply supporting supplemental Rule 50(b) motion of no unjust enrichment filed 9/12/23.