Apple has decided to pause the sales of its Apple Watch Series 9 and Apple Watch Ultra 2 in the United States. This decision, prompted by a recent ruling from the U.S. International Trade Commission (ITC), marks a significant development in the ongoing dispute between Apple and medical device company Masimo.
The sales suspension, effective from December 21 for online purchases and December 24 for in-person retail, adds another layer of complexity to Apple’s financial challenges in 2023.
Why It Matters:
The timing of Apple’s decision to halt the sales of its latest products, particularly during the crucial holiday season, underscores the gravity of the situation. With Apple already facing a fifth consecutive quarter of shrinking revenue, the sales pause is poised to impact the company’s financial performance in 2023. This article delves into the details of the dispute, its potential consequences, and Apple’s strategic response.
Background of the Dispute:
Masimo, a medical device company with a focus on fitness-tracking smartwatches, has accused Apple of infringing on its intellectual property, specifically related to pulse oximetry technology. The contention revolves around Apple’s blood oxygen sensor, which Masimo claims violates its patents. Apple, however, vehemently disagrees with these allegations.
Apple’s Response and Ongoing Developments:
In response to the ITC ruling, an Apple spokesperson expressed strong disagreement with the order. The company revealed that a Presidential Review Period is currently underway regarding the ITC order, and this period will extend until December 25. Despite the ongoing review, Apple is proactively taking measures to comply with the ruling should it stand. Apple affirms its commitment to returning Apple Watch Series 9 and Apple Watch Ultra 2 to U.S. customers promptly in case the order is upheld.
Sales Pause Details and Impact:
The sales pause is scheduled to commence at 3 p.m. ET on Thursday, December 21, aligning with the potential enforcement of the ITC ruling from December 26 onwards. Notably, the ruling has implications for all watches from Apple Watch 6 onwards, although Apple no longer sells earlier models. Sales outside the U.S. remain unaffected, and Apple has expressed its intention to appeal the ruling.
Legal Journey and Timeline:
The legal dispute between Masimo and Apple originated in 2020 when Masimo filed a case in a U.S. district court, alleging 17 instances of patent infringement and trade secrets violations against Apple. Dissatisfied with the pace of the federal court process, Masimo initiated a separate case with the U.S. International Trade Commission. In October, the ITC ruled in favor of Masimo, determining that Apple had infringed on some of Masimo’s patents. This decision triggered a 60-day Presidential Review Period, which concludes on December 25. The final decision rests with the U.S. Trade Representative, and the president may have the option to weigh in with a rare veto.
As a market leader in the smartwatch industry, Apple’s decision to pause sales has broader implications. In 2022, Apple sold an impressive 53.9 million smartwatches, according to Business of Apps. However, the dispute may impact Apple’s market standing, leading to potential shifts in consumer preferences and orders during the limited 72-hour window before the sales halt.
The temporary suspension of Apple Watch Series 9 and Apple Watch Ultra 2 sales adds complexity to Apple’s already challenging financial landscape. The ongoing dispute with Masimo and the ITC ruling pose significant hurdles, and Apple’s strategic response will undoubtedly shape its future in the wearables market. As the industry awaits the resolution of this legal saga, Apple enthusiasts and investors alike will be closely watching the developments in the coming weeks.