A massive legal battle is brewing after the Biden administration refused to veto an International Trade Commission (ITC) import ban on the Apple Watch.
The ITC ruled in December that Apple infringed wearable heart monitoring technology patented by California startup AliveCor. Apple currently uses an EKG sensor in question in its high-end Apple Watch models.
U.S. Trade Representative Katherine Tai on Tuesday allowed the ITC’s decision to pass, despite apparent lobbying efforts by Apple to get the Biden administration to block a potential ban on its popular smartwatch.
From there, the two companies are about to get into a never-ending legal dispute. Here’s what will happen next.
The Court of Appeal will decide the fate of Apple
The Commerce Department’s Patent Trial and Appeal Board (PTAB) ruled in December that the AliveCor patents at the center of the ITC case were invalid. The PTAB ruling suspended the ITC’s import ban on Apple Watch.
AliveCor is appealing the PTAB’s decision, while Apple is appealing the ITC’s decision. A federal appeals court will ultimately decide whether Apple Watches will be subject to an import ban.
William Mandir, a partner at intellectual property law firm Sughrue Mion, said appellate courts typically side with the PTAB’s ruling about 75% of the time, giving Apple an early advantage.
“Overall, it’s an uphill battle that, on the face of it, seems to favor Apple,” Mandir said. “But you would really have to dive into the details to see what the merits are on appeal.”
AliveCor first shared its technology with Apple in 2015 in hopes of securing a partnership with the tech giant.
The startup said Apple in 2018 introduced Apple Watch models with built-in heart monitoring sensors — and blocked third-party app providers from accessing users’ heart rate data — forcing AliveCor to cancel sales of its Apple Watch heart monitoring accessory.
These claims would be moot if an appeal court upheld the PTAB’s decision. Apple said in court filings that it began developing and patenting its own heart monitoring systems more than a decade ago.
“The patents underlying the AliveCor case have been declared invalid, and for this reason, we should ultimately prevail in this case,” an Apple spokesperson said in a statement.
Import ban won’t happen anytime soon
The appeals process is expected to drag until mid-2024, as the general time frame for PTAB appeals is 12 to 18 months, according to AliveCor.
This means that Apple Watch models won’t face an import ban for some time, and Apple could explore several avenues to avoid the ban altogether.
AliveCor is pushing for a settlement where Apple pays the startup to license its heart monitoring technology. That would prevent an Apple Watch import ban, but AliveCor said Apple hasn’t shown any interest in settling.
“We can license our IP to them tomorrow or the next second if they want, but they don’t want to have a conversation. It’s about going with litigation rather than innovation,” Priya Abani, CEO of AliveCor, told The Hill.
Even if Apple lost the appeal and chose not to settle, the company could still keep Apple Watch sales going by making changes to the device.
“They should remove the feature found to be infringing or disable it. Another option is that they could keep the feature if there’s a way to redesign it so it still works but doesn’t infringe the patent,” said John Rabena, managing partner at Sughrue Mion. “Watches wouldn’t go away, but maybe a feature would.”
Apple Watch has triggered other legal challenges
AliveCor is pursuing a separate antitrust lawsuit against Apple, which is expected to go to trial in early 2024.
The startup claims Apple made software updates accompanying the introduction of its own heart monitoring app that blocked other companies from accessing Apple Watch users’ heart rate data, blocking competition and cutting off AliveCor users.
“With just one update, Apple has eliminated the competition that consumers clearly wanted and needed, depriving them of the choice of better heart rate analysis than Apple can provide,” AliveCor wrote in its complaint from May 2021. “And all for an additional gain in value for a company that is already worth two trillion dollars.”
Apple has argued that it is under no obligation to provide its platform to another company.
In March 2022, a federal judge ruled against Apple’s attempt to dismiss the lawsuit, saying the purpose of the update was “to prevent third parties from identifying irregular heart rate situations and competing heart rate analysis apps”.
Abani said Apple frequently uses a similar tactic with other app developers to stifle competition, forcing users with less choice and less innovative technology. She described AliveCor’s lawsuit as a “David vs. Goliath battle” with huge implications for the future of startups in the United States.
Apple received another blow last month when an ITC judge ruled that Apple infringed pulse oximeter sensors patented by medical technology company Masimo.
The case will go to the full committee this year, where the ITC could enact a new import ban on Apple Watch models that use the technology.