Apple Races Against Time to Save Apple Watch Sales Amidst Patent Dispute

Apple is in a race against time to tweak the software of its Apple Watch, particularly the blood oxygen level measuring algorithms, as it faces a potential ban in the US over a patent dispute with California-based company Masimo, according to a report by Bloomberg. The dispute revolves around the blood oxygen sensor introduced with the Apple Watch 6 in 2020, which Masimo claims violates its patents related to light-based blood-oxygen monitoring.

The International Trade Commission (ITC) upheld Masimo's claims back in October of this year, prompting the case to enter a 60-day review period, in which it'll be reviewed by US President Joe Biden. If Biden doesn't veto the ITC's decision then Apple will be barred from selling the Apple Watch Series 9 and the Apple Watch Ultra 2, which are both equipped with blood oxygen sensing capabilities. In anticipation of the looming ban Apple are planning to halt the sales of these models of Apple Watch on their website from December 21st, and in retail stores on December 24th.

This move couldn't have come at a worse time for Apple: the run-up to Christmas day. While settling the case with Masimo could be a way for Apple to continue selling the Apple Watches, the current focus is on making last minute software changes. Apple intents to submit the software improvement to the ITC for approval, even though the CEO of Masimo, Joe Kiani, has expressed his doubts that a software update would resolve the situation. Kiani stated "Our patents are not about the software, they're about the hardware with the software"

 The situation is further complicated by the history between Apple and Masimo. In 2013, Apple considered acquiring Masimo and hiring Joe Kiani to work on the medical features of its (then unreleased) new smartwatch, however, this deal fell through. Kiani states that Apple subsequently hired over 20 Masimo engineers, doubling their salaries and having them develop medical technology similar to that of Masimo's, leading to a deliberate infringement of intellectual property.

A complete overhaul of the Apple Watch's hardware, if deemed necessary for this case, would pose significant challenges for Apple. Even if the ITC approves the hardware changes, the process of manufacturing and shipping out the modified version of, not just the Apple Watch Series 9 but the Apple Watch Ultra as well, could take several months, costing sales along the way.

Apple plans to appeal the ITC's ruling, previously referring to it as "erroneous". While the potential ban only applies to Apple Watch sales throughout the company's sales channels in the US (such as its website and retail stores) Consumers can still purchase the Apple Watch through other retailers such as Best Buy, Walmart and Target. The outcome currently remains uncertain for Apple as it navigates this difficult period.