Masimo’s Twin Wins Over Apple Boost Leverage in Watch-Tech War

Masimo Corp.'s double-win last week in its intellectual property dispute over Apple Inc.‘s smartwatches bolsters its leverage in potential settlement talks even as the $634 million infringement verdict and a reopened trade investigation fall short of a decisive blow.

California jurors found Nov. 14 that the Apple Watch’s heart-rate alert function infringed Masimo’s US patent No. 10,433,776, which covered a power-saving system for light-based pulse- and oxygen-monitoring and expired in June 2022.

Earlier that day, the US International Trade Commission launched a “combined modification and enforcement proceeding” after Masimo urged the agency to resolve tensions between two US Customs and Border Protection rulings over whether the redesigned Apple Watches can escape an earlier import ban over other patents. The ITC expects to decide within six months.

The developments add pressure on Apple in a six-year patent and trade-secrets fight over its flagship wearable device.Last month, Apple’s chief financial officer credited Apple Watch sales with helping drive more than $9 billion in quarterly revenue in the Wearables, Home and Accessories category.

But the verdict’s impact may be constrained by the procedural realities of the many disputes at play between the legal rivals.

The medical-device company now has “a powerful negotiating chip” in any global settlement talks, said Jeff Saltman, an intellectual-property trial lawyer at Cole Schotz PC. “While the parties are unlikely to value the verdict at its full value, it is still a substantial sum even if a discount is applied.”

Masimo’s new bargaining power, however, is “substantially less than one might think,” said Scott Daniels, a litigator at Xsensus LLP focusing on district courts and the ITC. Apple can still ask Judge James Selna to reduce the award and can appeal, he said, adding that the ITC applies its own standards independent of district-court rulings.

University of Utah law professor Jorge Contreras agreed, noting that Apple’s promised appeal leaves “a possibility that the verdict will not stand in the end.”

‘Maximum Pain’

Last week’s victories for Masimo are just part of broader clash with Apple over wearable-sensor innovation that’s sprawled across district courts, the ITC, US Customs and Border Protection, and the US Court of Appeals for the Federal Circuit. Masimo awaits a trade-secrets bench ruling from Selna and is challenging a CBP decision allowing imports of Apple Watches redesigned to evade the ITC import ban, which Apple is also challenging at the Federal Circuit.

Though the patent at issue in the California lawsuit has expired, the ITC proceeding—which centers on two still-active Masimo patents involving light-based blood-oxygen measurement—could hit Apple’s sales by constraining Apple Watch functionality, Stanford Law School professor Mark Lemley said.

“The amounts of money here are large,” he said, “but they are probably less important than the possibility of shutting down Apple Watch features,” as the ITC did in December 2023, forcing the tech giant to design a work-around to restart shipments.

Both companies have sought injunctions—frequently over money damages—to “impose maximum pain” and better their position in any licensing or settlement discussions, said Molly Kocialski, a lawyer at Holland & Hart LLP. Paired with the renewed threat of an import ban, the nine-figure verdict “provides Masimo with additional leverage” at the bargaining table.