Masimo vs. Apple – Important Considerations Regarding the International Trade Commission
Understanding the International Trade Commission and its Role in Intellectual Property Protection
Exemplified by the recent dispute between Masimo and Apple regarding Apple’s Series 9 and Ultra 2 watches, the U.S. International Trade Commission (ITC) is an important venue that deserves consideration by those seeking to enforce their intellectual property (IP). In today’s global economy, protecting intellectual property rights is paramount for businesses seeking to maintain their competitive edge. The ITC, an independent federal agency of the United States, plays a crucial role in safeguarding trade interests at the border, particularly concerning IP infringement issues. This article will delve into what the ITC is, its functions, and how it differs from federal courts in enforcing IP rights.
What is the ITC?
The ITC is an independent and bipartisan agency entrusted with protecting trade interests, including unfair importation investigations under 19 U.S.C. Section 337 concerning intellectual property violations. These violations range from patent and trademark infringement to misappropriation of trade secrets by imported goods.
How Does the ITC Function?
Under Section 337 investigations, a complainant must demonstrate two key elements: first, that imported products infringe a valid and enforceable IP right, and second, that a related industry in the U.S. exists or is being established. Once a complaint is filed, the ITC typically decides whether to institute an investigation within 30 days.
If instituted, an Administrative Law Judge (ALJ) oversees the investigation, including discovery, hearings, and initial determinations. Subsequently, the ITC issues a final determination, subject to a 60-day review period by the U.S. President. Either party can appeal the ITC’s decision to the United States Court of Appeals for the Federal Circuit (CAFC).
Remedies and Considerations
Should the ITC find a violation of Section 337, it may issue various remedies, including exclusion orders, cease and desist orders, and consent orders. Exclusion orders may be general or limited, aimed at preventing the importation of infringing products. Cease and desist orders prohibit further infringement activities, while consent orders entail the infringer’s agreement to cease unlawful conduct.
ITC vs. Federal Courts: Key Differences
The ITC offers several advantages over federal courts for enforcing patent rights. Section 337 investigations tend to be faster, typically taking around 13 months to complete compared to several years in federal court litigation. Discovery processes are also expedited, with shorter response times to discovery requests.
Moreover, obtaining exclusion and cease and desist orders from the ITC is generally easier compared to injunctions in federal court litigation. However, there are drawbacks, such as decisions being made by an ALJ rather than a jury, and the absence of monetary damages as a remedy.
The ITC serves as a vital forum for addressing intellectual property disputes swiftly and effectively. Understanding its functions and differences from federal courts is crucial for businesses seeking to protect their innovations in today’s global marketplace. The ITC’s enforcement of IP rights was recently demonstrated by the dispute between Masimo and Apple.
HISTORY OF THE MASIMO v. APPLE DISPUTE
An ongoing battle between tech giant Apple and smaller companies Masimo and Cercacor is being considered a David versus Goliath battle over blood-oxygen sensor technology included in certain Apple Watch models. Masimo is a medical technology company that specializes in non-invasive measurements which measure physiological parameters such as pulse rate and arterial oxygen saturation. Masimo developed the Signal Extraction Technology (SET), in which physiological parameters are measured by transmitting light through body tissue and receiving the light which has been attenuated by various components of the body tissue, including blood, with a series of sensors.
Masimo sought and received numerous U.S. patents for much of its technology, specifically important advances in sensor technologies that work together as part of Masiomo’s systems and algorithms. In 1998, Masimo even spun certain technologies off into a new company, Cercacor, which continues to license and develop Masimo technology. Despite having sought patent protection and closely guarding trade secrets, several larger competitors have allegedly used Masimo’s technology without a license.
The most notable alleged patent infringer is tech giant Apple, who purportedly contacted Masimo in 2013 to meet about a potential collaboration to integrate Masimo’s technology into their products. Following several meetings where confidential Masimo technology may have been discussed, Apple allegedly began hiring Masimo employees, including engineers and key management. For example, Michael O’Reilly, Masimo’s Chief Medical Officer and Executive VP for Medical Affairs was hired by Apple in 2013, after working for Masimo for about 5 years and shortly after the meetings with Apple. Marcelo Lamego, former Chief Technical Officer of Cercacor and former Research Scientist at Masimo was also hired by Apple in 2014, where he pursued numerous patent applications for Apple, allegedly related to technology he was intimately involved with at Cercacor and Masimo.
Apple announced the first version of its Apple Watch in 2014 and shipments began in April of 2015. Apple Watch Series 3 was released 2017, having new heart monitoring technology, which reportedly had significant performance issues. In 2018 and 2019, Apple improved the physiological measurements in its Apple Watch 4 and Apple Watch 5, respectively, by allegedly integrating technology developed by Masimo, specifically, technology that Lamego may have been an inventor for while he worked at Cercacor.
CASE DETAILS
In January 2020, Masimo Corp. sued Apple for patent infringement, trade secret misappropriation, and declaratory judgment of patent ownership in the Central District of California. The suit included 10 U.S. patents owned by Masimo relating to pulse oximeter devices, sensors, and data collection systems. Masimo alleged that Apple knowingly included technology owned by Masimo into physiological monitors included in the Apple Watch Series 4 and 5 devices. For example, Apple Watch 4 and 5 are wearable devices that measure a physiological parameter, such as heart rate, using a plurality of emitters of different wavelengths of light and using at least four detectors, for example, photodiode sensors. The detectors’ output signal is responsive to light from the light emitters attenuated by body tissue, where the signals are indicative of a physiological parameter of the wearer. Some of Apple’s U.S. Patent Publications allegedly disclose technology that infringes all ten of Masimo’s patents included in the lawsuit; all of which former employees O’Reilly and Lamego were either inventors of or directly exposed to during their tenure at Masimo and/or Cercacor. Therefore, Masimo alleges that Lamego misappropriated confidential trade secrets developed during his time at Masimo and used that information to seek patent protection on technology owned by Masimo/Cercacor while working for Apple. Accordingly, Masimo seeks a change of ownership over five U.S. patents and two patent publications currently assigned to Apple, which all list Lamego as an Inventor.
In June 2021, Masimo also filed a complaint at the US International Trade Commission (ITC) against Apple for importing into the US products which infringe at least 5 of Masimo’s patents. The following year, Apple followed suit by filing petitions for inter partes review at the Patent Trial and Appeal Board (PTAB) against all 12 asserted patents. The PTAB denied institution of at least some of these petitions, including the two Masimo patents ultimately addressed by the ITC. On October 26, 2023, the ITC found that Apple’s Series 9 and Ultra 2 model watches infringed some claims of some of Masimo’s patents. In December 2023, after President Biden did not veto the ITC ban, the limited exclusion order banning the importation of the infringing watches went into effect. Apple immediately filed an emergency appeal to the CAFC, resulting in an interim stay on the import ban. Several weeks later, in January 2024, the CAFC agreed with Masimo, lifting the stay on the import ban. On January 18, 2024, the ITC’s limited exclusion order went into effect resulting in a ban against importation into the United States of the Apple Watch Series 9 and Ultra 2 models.
The ongoing dispute between Masimo and Apple may have implications for customers already owning Apple watches containing the infringed technology and on how Apple designs new devices in the future. Apple’s website already confirms that the “Apple Watch Series 9 and Ultra 2 no longer include the blood oxygen feature.” To overcome the ITC’s exclusion order, Apple has disabled the pulse oximeter feature via software so the Series 9 and Ultra 2 watches can be imported into the United States. Masimo characterizes that move as “a positive step toward accountability.”[1] Should Apple win the pending appeal of the ITC’s ruling; Apple will likely re-enable the pulse oximeter feature via an update since the watches currently being imported still have the pulse oximeter hardware. For those customers that purchased a Series 9 or Ultra 2 prior to the import ban, the pulse oximeter feature is reportedly still working and will not be disabled. However, if an Apple customer needs a watch repair that results in a total replacement of the watch, the replacement watch will likely have the pulse oximeter feature disabled, regardless of the version.
CONCLUSION
As illustrated by the dispute between Masimo and Apple, the ITC’s rulings can have a drastic impact on competitors’ ability to import products that contain infringing features. ITC administrative agency decisions can result in outright bans on importing infringing products or costly redesign of products. For patent and other IP owners, every enforcement plan should consider whether the ITC is a viable option.
