Apple Inc (NASDAQ:AAPL, ETR:APC) has filed an appeal against the decision to ban imports of its smartwatches into the US, following a complaint by medical monitoring technology company Masimo.
All eyes are on the outcome of the appeal and the subsequent decisions by the US Customs and Border Protection, due on January 12, as they will determine the future availability of Apple's latest watch models in the US market.
The appeal comes after the US President Joe Biden's administration chose not to veto a ruling by a government tribunal.
Claims of patent theft
The dispute concerns allegations by Masimo that Apple stole its pulse oximetry technology, used to measure blood-oxygen levels, and incorporated it into the Apple Watch.
Masimo claims that Apple not only used its technology but also poached its employees.
For Apple’s part, it describes Masimo's legal actions as a strategic move to pave the way for its competing smartwatch.
Some models still available
While the ban has led to a pause in the sales of Apple Watches that use this technology starting from the Series 6 model in 2020 and Ultra 2 smartwatches in the US, these models remain available from other retailers, including Amazon (NASDAQ:AMZN), Best Buy, and Walmart (NYSE:WMT).
The ban does not affect the Apple Watch SE, a less expensive model, and previously sold watches are not impacted.
The US International Trade Commission (ITC) issued the order, which became final on December 26, following US Trade Representative Katherine Tai's decision not to intervene.
A spokesperson for Masimo hailed the ITC's decision as a victory for the US patent system and for American consumers.
The ongoing legal battle includes a mistrial in a California federal court earlier this year, and Apple's separate lawsuit against Masimo in Delaware for patent infringement.
Headache for Biden
The dispute is causing a stir not only because of the high-profile nature of the products involved but also because it marks a rare instance where a presidential administration has not overturned an ITC ruling since 2013 when President Barack Obama did so.
The Biden administration similarly refrained from overturning a separate import ban on Apple Watches in February, following a complaint from AliveCor.
Nevertheless, the government would be considering the blow to GDP. Apple's wearables, home and accessory business, which includes the Apple Watch, remains a significant revenue source, bringing in over $8 billion in the third quarter of 2023.
The emergency appeal to halt the ban is being heard by the US Court of Appeals for the Federal Circuit.
The company has requested that the ban be paused at least until the US Customs and Border Protection determines if redesigned versions of the watches infringe on Masimo's patents.
A decision from the customs office is expected by January 12.