The ongoing patent spat between Masimo
(Nasdaq:MASI)
and Apple has another twist as a federal judge declared a mistrial.
A federal judge in California made the ruling yesterday after jurors could not come to a unanimous verdict, according to a Reuters report.
A Masimo spokesperson issued the following statement following the ruling:
“While we are disappointed that the jury was unable to reach a verdict, we intend to retry the case and continue to pursue legal redress against Apple. As we begin that process, the United States Trade Commission is scheduled in the coming months to decide whether to ban the importation of certain models of the Apple Watch, following a ruling last year by an Administrative Law Judge that Apple infringed one of Masimo’s patents for pulse oximetry.”
Reuters reported that an Apple statement says the company “deeply respects intellectual property and innovation and does not take or use confidential information from other companies.” The report notes that Apple plans to ask the court to dismiss the remaining claims in the case.
Shares of MASI fell more than 4% to $181.19 apiece in morning trading today. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was up slightly.
The history behind the Masimo-Apple patent spat
Masimo develops the SET pulse oximetry technology. Its uses include reducing blindness in neonatal ICU patients and monitoring post-surgical patients on opioids. It also offered remote patient monitoring for COVID-19. Masimo also recently debuted its own W1 watch that provides continuous health data.
In January 2020, Masimo accused Apple of poaching its employees and infringing 10 of its patents to improve the health monitoring functions of the Apple Watch. The court sought to determine whether Apple misused confidential information from Masimo related to the technology used to measure health data.
Earlier this year, as referenced by the Masimo spokesperson, a U.S. Administrative Law Judge in Washington, D.C. ruled in the company’s favor in a patent spat with Apple.
The judge ruled that Apple violated Section 337 of the Tariff Act of 1930 by importing and selling certain Apple Watches in the U.S. These watches featured light-based pulse oximetry functionality and components. However, the judge also ruled that Apple did not violate four other patents belonging to Masimo.
The U.S. International Trade Commission must now consider whether to implement an import ban on Apple Watches.
A similar spat over IP went on between AliveCor and Apple. It ended in February when the final determination rule favoring AliveCor cleared presidential review.
The analysts’ view
BTIG analysts Marie Thibault and Sam Eiber wrote that the latest twist in the Masimo-Apple battle “suggests Masimo will most likely not come away victorious.”
They noted that reports suggest plans for the jury to continue deliberations. According to the analysts, once this trial ends, investors may shift focus to the ITC investigation. Thibualt and Eiber said they expect the full ITC commission to vote on whether to review the final determination on May 15. A vote would then follow on July 17 to potentially affirm the initial determination.
BTIG retains its “Buy” rating for Masimo despite the latest news. The analysts may be waiting for Masimo to report its first-quarter earnings on May 9.