Apple Watch battle heralds further patent wrangles

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There is nothing like an import ban on a popular consumer gadget at Christmas time to draw attention to the legal lottery of patent enforcement in the US.

Barring an unlikely intervention from the White House, Apple will be blocked from importing all but the most basic model of its Watch into the US from December 26. Cases such as this have become “a very expensive game of chicken” because the final result is hard to predict and can have a very dramatic result, says Mark Lemley, a law professor at Stanford University.

But while Apple has been left facing its first-ever import ban in its home market, it has also scored victories in the intellectual property battles being fought around the Watch that show the wider war is far from lost.

The likely ban follows a challenge from medical device maker Masimo, which claimed Apple breached two of its patents on pulse oximetry, a technology for monitoring the oxygen level in blood.

The case is a dramatic demonstration of the collision of different IP regimes when digital technology moves into new markets. In the early days of smartphones, the convergence of mobile communications and computing produced a barrage of lawsuits between computing companies such as Apple and Google on the one hand, and mobile technology companies including Nokia and Motorola on the other. Much the same is now happening on a broader front as mobile computing invades markets including healthcare, where medical device companies have their own IP moats.

Masimo has suffered setbacks in its campaign against Apple in other venues, including a case in federal court that resulted in a hung jury this year. But it had better luck before the International Trade Commission, a body set up more than a century ago to manage US tariffs. The ITC has since morphed into a forum for deciding whether imports pose an unfair threat to “domestic industry” — a quaint-sounding anachronism in an age of multinational companies and global supply chains.

The ITC has become a favourite venue for plaintiffs such as Masimo. Since a landmark 2006 patent case involving eBay, it has been far harder to persuade a federal court to grant an injunction barring the sale of products found to infringe patent rights. By contrast, the ITC’s only sanction is to issue exclusion orders that direct customs officers to block imports at the border.

Lemley at Stanford argues that the commission could wield this cudgel in less damaging ways. Others have proposed reforms, including strengthening the White House’s ability to veto ITC bans when a valid public interest is at stake. 

Large companies still have plenty of other weapons at their disposal, as a parallel case involving a different medical sensor on the Apple Watch shows. The ITC last year issued another import ban against the device after a complaint from medical equipment maker AliveCor. The case involved electrocardiogram technology, which measures electrical signals from the heart.

That ban was put on hold after Apple challenged AliveCor’s patents before a body known as the Patent Trial and Appeal Board. This was set up by the 2011 America Invents Act, the last major reform of the US patent system, to make it easier to challenge the validity of patents and tip the balance away from “patent trolls” accused of abusing the system.

Critics complain that the rebalancing went too far and that the PTAB has become a tool of big tech companies. The board ruled that previous advances in the field made the AliveCor patents “obvious”, and therefore unenforceable. AliveCor has appealed against that decision to the courts. Apple failed in a similar PTAB challenge to the validity of Masimo’s patents, though it has also taken its case to an appeal court.

The mixed results that come out of tortuous legal battles such as this can have dramatic consequences — as the likely Watch ban shows. One effect may be to discourage some plaintiffs, since it takes deep pockets to battle a big company on so many different legal fronts.

Apple is working on a way around the import ban, probably involving either a software update to disable its offending sensor or removing it from the Watch entirely. It may take weeks, or even months, to come up with something that satisfies US customs officers. But it’s unlikely to be the last such battle as Apple seeks to turn its Watch into an important medical accessory.

richard.waters@ft.com