Apple Battle Update
Yesterday we noted that an ITC judge had issued a preliminary final decision concerning a patent infringement case brought against Apple (AAPL) by Masimo (MASI), a major producer of pulse oximetry sensors. In the ruling, Apple was said to have violated one of four Masimo patents with the ITC ordering a ban on the importation of the Apple Watch 6. The ruling now goes to President Biden for his review, and should he sign the ruling after the 60 day review period ends, Apple will be forced to agree to a royalty arrangement with Masimo, or stop selling the Apple Watch 6 in the US. It seems that on December 22 of last year the ITC also ruled in favor of a patent infringement suit against Apple by AliveCor (pvt), the producer of the KardiaMobile™ heart monitoring device that is advertised on TV, determining that Apple had violated two AliveCor patents and issuing both a cease & desist order and a $2 bond on any devices that are imported during Apple’s PTAB (Patent Trial & Appeal Board) hearings.
The Masimo suit seems like it is coming to a conclusion however we expect considerable lobbying to avoid an outright ban on the Apple Watch 6 before the President’s decision, and Apple will have the right of appeal with PTAB again if the president does sign off on the ban, so things could take some time before they are resolved. The ITC bond is suggestive of what Apple might wind up paying per unit if the infringement is upheld, and Masimo has another suit against Apple in Federal Court concerning an additional 10 patents it believes Apple has infringed upon, so there is considerable pressure on Apple to resolve the Masimo ITC issue with an agreement that would include any other potential infringement legalities.
While license fees for both suits will do little to reduce Apple’s massive cash position, it seems that Apple’s licensing practices are a bit unusual in that before they wind up licensing a patent, they incur years of legal fees in addition to the eventual per unit license fee that would be backdated to the original violation date. Its hard to know how the legal fees compare to the license payout, but it seems that reaching an agreement before the product is released seems a better plan. Of course, every small company with IP will try to squeeze money out of a company with such vast resources, but we expect most would rather negotiate down a bit than spend years and considerable cash litigating against Apple’s legal team that will be happy to appeal any unfavorable decision ad infinitum.
The Masimo suit seems like it is coming to a conclusion however we expect considerable lobbying to avoid an outright ban on the Apple Watch 6 before the President’s decision, and Apple will have the right of appeal with PTAB again if the president does sign off on the ban, so things could take some time before they are resolved. The ITC bond is suggestive of what Apple might wind up paying per unit if the infringement is upheld, and Masimo has another suit against Apple in Federal Court concerning an additional 10 patents it believes Apple has infringed upon, so there is considerable pressure on Apple to resolve the Masimo ITC issue with an agreement that would include any other potential infringement legalities.
While license fees for both suits will do little to reduce Apple’s massive cash position, it seems that Apple’s licensing practices are a bit unusual in that before they wind up licensing a patent, they incur years of legal fees in addition to the eventual per unit license fee that would be backdated to the original violation date. Its hard to know how the legal fees compare to the license payout, but it seems that reaching an agreement before the product is released seems a better plan. Of course, every small company with IP will try to squeeze money out of a company with such vast resources, but we expect most would rather negotiate down a bit than spend years and considerable cash litigating against Apple’s legal team that will be happy to appeal any unfavorable decision ad infinitum.
RSS Feed