An extensive legal battle is brewing after the Biden administration declined to veto an International Trade Commission (ITC) import ban on the Apple Watch.
The ITC ruled in December that Apple infringed on wearable heart monitoring technology patented by California startup AliveCor. Apple currently uses an electrocardiogram sensor in question in its high-end Apple Watch models.
U.S. Trade Representative Katherine Tai on Tuesday allowed the ITC decision to go through, despite Apple’s apparent lobbying effort to get the Biden administration to block the potential ban on its popular smartwatch.
From here, the two companies are set to engage in a drawn-out legal dispute. Here’s what will happen next.
Appeals court will decide Apple’s fate
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 decision put the ITC’s Apple Watch import ban on hold.
AliveCor is appealing the PTAB ruling, while Apple is appealing the ITC ruling. A federal appeals court will ultimately decide whether Apple Watches will face an import ban.
William Mandir, a partner at intellectual property law firm Sughrue Mion, said that appeals courts typically side with the PTAB decision around 75 percent of the time, giving Apple an early advantage.
“In general, it’s an uphill battle, which on its face seems to favor Apple,” Mandir said. “But you’d have to really dive into the specifics 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 that Apple introduced Apple Watch models in 2018 that had 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.
Those claims would be moot if an appeals court affirmed the PTAB ruling. Apple said in court filings that it first began developing and patenting its own heart monitoring systems more than a decade ago.
“The patents on which AliveCor’s case rest have been found invalid, and for that reason, we should ultimately prevail in this matter,” an Apple spokesperson said in a statement.
Import ban won’t happen anytime soon
The appeals process is expected to drag into the middle of 2024, as the general timeline for PTAB appeals is 12 to 18 months, according to AliveCor.
That means Apple Watch models won’t face an import ban for some time, and Apple could explore several avenues to avoid the ban entirely.
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 that Apple hasn’t shown interest in settling.
“We can license our IP to them tomorrow or the next second if they would like to, but they don’t want to have a conversation. It’s all about going with litigation rather than innovation,” AliveCor CEO Priya Abani told The Hill.
Even if Apple lost the appeal and chose not to settle, the company could still keep Apple Watch sales alive by making modifications to the device.
“They would have to take out the feature that was found to infringe or disable it. Another option is they could keep the feature if there’s a way to redesign it so it still works but doesn’t infringe the patent,” Sughrue Mion managing partner John Rabena said. “The watches wouldn’t go away, but maybe a feature would.”
Apple Watch sparked other legal challenges
AliveCor is pursuing a separate antitrust lawsuit against Apple, which it expects to go on trial in early 2024.
The startup claims that Apple made software updates accompanying the introduction of its own heart monitoring app that prevented other companies from accessing Apple Watch users’ heart rate data, blocking competition and cutting off AliveCor users.
“With a single update, Apple thus eliminated competition that consumers clearly wanted and needed, depriving them of choice for heart rate analysis that is better than what Apple can provide,” AliveCor wrote in its May 2021 complaint. “And all for an incremental value gain for an already-two-trillion-dollar company.”
Apple argued that it’s under no obligation to provide its platform for use by another company.
A federal judge in March 2022 ruled against Apple’s bid to dismiss the lawsuit, stating that the update’s purpose was to “prevent third parties from identifying irregular heart rate situations and from offering competing heart rate analysis apps.”
Abani said that Apple frequently uses a similar tactic with other app developers to quash competition, saddling users with fewer choices and less innovative technology. She described AliveCor’s lawsuit as a “David vs. Goliath battle” with enormous implications for the future of startups in the U.S.
Apple was dealt another blow last month when an ITC judge ruled that Apple infringed on pulse oximeter sensors patented by medical tech company Masimo.
The case will go before the full commission this year, where the ITC could enact yet another import ban on Apple Watch models that use the technology.