Bloomberg reports that the U.S. Court of Appeals declined to grant a longer pause on the Apple Watch import ban as a result of patent litigation with Masimo
(Nasdaq: MASI)
.
Shares of MASI grew 2.1% to $122.57 apiece just before the market closed today on the back of the news.
The patent battle goes back as far as January 2020, centering around light-based pulse oximetry technology used by the watches. Masimo develops a number of technologies that use pulse oximetry, including its recently FDA-cleared W1 smartwatch.
A turning point in the long-running dispute came in October when the U.S. International Trade Commission (ITC) ruled in Masimo’s favor. The ITC recommended a limited exclusion order for infringing Apple Watches with light-based pulse oximetry functionality. It found that Apple violated U.S. laws by incorporating this patented technology in its products.
In December, Apple agreed to stop selling its Series 9 and Ultra 2 watches after the ITC ruling passed a Presidential review. However, this month, the company implemented a workaround that removed the pulse oximetry functionality in case its appeal failed. The appeal sought to hold off on the ban for the entirety of the appeals process, with the tech giant able to sell under an interim stay.
Bloomberg says that temporary stay expires at 5 p.m. ET on Thursday, Jan. 18, and that the court denied Apple’s appeal to lengthen the stay.
The analysts’ view on the latest development between Apple and Masimo
BTIG analysts Marie Thibault and Sam Eiber believe the latest court ruling could improve the chances of an eventual settlement between Apple and Masimo. They suggested that the news of Apple’s workaround could have hastened the court’s decision.
“We expect Apple will begin selling the redesigned watches once the temporary stay expires tomorrow,” the analysts wrote. “We continue to think [Masimo] has the upper hand in this legal war but are uncertain of timing or exact likelihood of any potential settlement.”
Masimo’s statement on Apple’s removal of the pulse oximetry function called the move “a positive step toward accountability.”
“It is especially important that one of the world’s largest and most powerful companies respects the intellectual property rights of smaller companies and complies with ITC orders when it is caught infringing,” the statement issued earlier this week read.
Bloomberg previously said that Apple already shipped modified watches to U.S. retail locations.