Context: The Exclusion Order Enforcement (EOE) Branch of United States Customs & Border Protection (CBP) cleared the importation into the U.S., and by extension the sale in the U.S., of Apple Watch models with a minor modification that disabled the infringing feature, which is the measuring of blood oxygen levels at the pulse: pulse oximetry (January 15, 2024 ip fray article). On that basis, the United States Court of Appeals for the Federal Circuit decided not to stay enforcement of the import ban for the duration of the appellate proceedings (January 17, 2024 ip fray article): it wasn’t considered irreparable harm that Apple couldn’t import and sell Watches with that feature.
What’s new: The January 12, 2024 CBP order has recently been published (CBP webpage). The parties’ filings with the appeals court were heavily redacted where they discussed the enforcement dispute over Apple’s workaround. Now it’s a bit clearer what technical changes Apple made and why they managed to get their workaround Watches cleared. There is some hardware “designation” in the newer Watches that tells the software in those Watches not to perform pulse oximetry although all of the necessary components are present. Masimo managed to reenable pulse oximetry, but only after jailbreaking older iPhones and using them to manipulate the Watch, which constitutes a “significant alteration” of the product.
Direct impact: The fact that Masimo could reenable the feature by running some custom software on jailbroken older iPhones absolutely positively means that Apple itself can reactivate that feature for its customers in the event it prevails on appeal or, in the alternative, in late August 2028 at the latest (because the patents-in-suit expire then). Apple can simply provide software for newer iPhones (the newer models that connect with the Watch) and make it available for download from the App Store, or may simply provide it as part of a routine system update. That software will then do what Masimo did with jailbroken iPhones and update the software of the Apple Watch so it will ignore the “hardware designation” that says “don’t offer pulse oximetry.” ip fray believes that in the event of a successful appeal, Apple is more likely than not to do that. It would be cheap and legal, and it would enhance customer satisfaction. Furthermore, ip fray estimates that Apple has at least a 30% chance of a successful appeal, and may adjust that number when briefing is complete (i.e., after Apple’s reply brief) as well as after the appellate hearing.
Wider ramifications: Various commentators, some of whom are patent professionals, have been following this case with great dismay because they viewed Masimo as a legitimate inventor and Apple as a bully. ip fray has a centrist view: Apple is certainly capitalizing on its vast resources and enormous sophistication in IP, but Masimo’s patenting strategy (filing a so-called continuation application after the launch of an Apple Watch with pulse oximetry to make an infringement case over something Apple developed independently) is more than debatable. In any event, should Apple later be in a position to give its customers pulse oximetry even though they bought a Watch where that feature was deactivated, critics will say U.S. patent enforcement is not strong and strict enough.
Can hidden features infringe patents?
The first thing to understand here is the legal standard for patent infringement when products (here, Apple Watch Series 6-9, and Apple Watch Ultra and Ultra 2) come with the components (here, hardware as well as software) required to provide certain functionality, but the average user can’t just use the feature, such as by running an app or maybe changing a setting that is accessible via a product’s regular user interface.
There are different types of patent claims. As patent lawyers say, “the name of the game is the claim”: it’s the claim that decides the scope of the patent, and the much longer description is just used to understand the claim. The two most important categories are apparatus (= device) claims and method claims:
- A “dead” product does not infringe a method claim directly. Say, you have an Apple Watch that comes with pulse oximetry. But it’s in a box. Until you wear it on your wrist and, if necessary, activate that feature, no pulse oximetry takes place. Thus there’s no direct infringement of the method claim. But if Apple sells you the gadget and lets you easily activate that feature, then Apple has a problem. It may induce infringement and be liable for that.
- In order to avoid that problem, Masimo focused on apparatus claims. Some of them start with “[a] user-worn device configured to non-invasively measure an oxygen saturation of a user, the user-worn device comprising,” followed by further criteria. If the patent claim reads on a device that meets certain criteria, then the device can constitute an infringing article regardless of whether anyone ever uses it, much less in a particular way.
At first sight, one could consider two positions on the expression “configured to” reasonable and defensible:
- One could reasonably think that “configured to” means it must be easy for a normal user to have the product perform pulse oximetry.
- One could also reasonably argue that “configured to” should have a broad meaning, and if all the prerequisite components (here, hardware and software) are on board, then that constitutes an infringing configuration.
The U.S. customs agency’s enforcement experts had to decide how to interpret “configured to” and relied on precedent according to which it means “programmed to, as opposed to being merely capable of, performing a task.”
So the difference is whether it’s ready to go or whether there’s just a capability that could be abstract. If Masimo had obtained and successfully asserted patent claims with a “capable of” wording, the outcome might (though it wouldn’t necessarily) have been a different one: Apple might have needed a more comprehensive workaround involving the removal of one or more components.
When is an alteration a legally significant alteration?
If you change the lock-screen picture of your phone, you perform an “alteration” of the product. But if that’s all it takes to activate a feature that raises patent infringement issues, it’s probably going to be considered an alteration that falls short of the kind of “significant alteration” that matters for legal purposes. In other words, it’s an “alteration” that is cosmetic and it’s easy to do.
Here, the “alteration” that Masimo performed involved jailbreaking older iPhones that those newer Watches don’t even connect with. They couldn’t make it work with newer iPhones, at least not during the limited amount of time they had before U.S. Customs decided, but those newer phones may just be too well protected anyway.
There’s no question that jailbreaking is a rather intrusive measure. It has serious implications. It’s not done by a lot of people. And in this case, it even required the use of older iPhones. All of that combined led those U.S. customs officials to determine that what Masimo did to reenable pulse oximetry on those workaround Apple Watches constituted a significant alteration.
That decision is reasonable, but Masimo’s position wasn’t wholly unreasonable: in the end, we’re talking about just having to make a small software change so that the hardware “designation” (in other words, some tiny element, such as a hardwired bit, that says “don’t do pulse oximetry because otherwise this thing can’t be imported into the U.S.”) would even become meaningless. It’s not like interrupting a circuit or something else that would at least require opening the case (and given the density of components in a Watch, you just couldn’t change any tiny piece of hardware in it). It’s really just a piece of information, and if you modify the software, that “don’t infringe” flag doesn’t matter and you get pulse oximetry.
Maybe Apple wasn’t even sure that this workaround would be accepted and would have presented another one
Given Apple’s and its lawyers’ (here, a team led by WilmerHale’s Mark Selwyn) sophistication, it’s possible that the workaround they presented to U.S. customs (and which then resulted in mid-January clearance) wasn’t the last thing they’d have tried.
What ip fray considers more likely is that Apple first tried (and indeed managed) to get this minimalistic workaround cleared. Apple would argue that it’s not minimalistic because it wasn’t just a software change: it also involves a hardware “designation.” But Masimo proved to U.S. customs that it is possible to activate pulse oximetry by a mere software change.
If Apple had not succeeded on that basis, Apple could still have submitted another workaround. Maybe they already had another one ready to go so they could have started another workaround clearance process without delay. Their next try might have been a version of the Apple Watch where an essential hardware component was missing. In that case, software alone couldn’t solve the problem, and customers buying a workaround version of the Apple Watch now would probably never have been provided with pulse oximetry as Apple would have had to replace their Watches, which is costly.
So Apple’s Plan A was to simply defend itself against Masimo, which could also have involved a Presidential veto (which the Biden Administration declined to put in) or a stay. Plan B was a workaround that allows reenabling the functionality later with a software change. And Plan C would probably have been a workaround where the feature could not be reenabled, but which would still have allowed Apple to sell those newer Watches.
Apple controls its walled garden and can simply ship a pulse oximetry activation app after a successful appeal or in late August 2028
Masimo’s engineers had to use older iPhones and jailbreak them. Apple doesn’t face such restrictions. It has a prerogative. Apple can do what it wants, even on newer iPhones, consistent with the Latin saying of Quod licet Iovi, non licet bovi (“What Jupiter (the king of Roman gods) may do is not allowed to a cow”).
For the time being, even Apple can’t do it because it would be illegal. The limited exclusion order (colloquially called “import ban”) is in place. If Apple shipped such a piece of software now, it would be breaking the law and the consequences not only for the company but also for the executives involves would be severe.
What Apple needs is a successful appeal. Not all of Apple’s arguments are necessarily convincing, but some are better than others. There are some grounds of appeal any one of which would singlehandedly defeat Masimo’s ban. There are a couple that would have effect if both succeeded. Apple has multiple bites at the apple now.
A hearing may still take place this year. Thereafter, the Federal Circuit will take its time to decide. If Apple loses, it can petition the Supreme Court of the United States, though that court rejects most such petitions. If Apple wins, Masimo can petition the Supreme Court, but the ban would probably be lifted until the top court has decided.
Let’s assume now that Apple wins when all is said and done, or it doesn’t but the patents expire (late August 2028): at that point, Apple can simply (and safely) reenable the pulse oximetry feature. Maybe some of the affected Watch models won’t be updated anymore (especially if they have to await expiration, which is almost 4.5 more years away), but the more recent ones presumably will.
Apple just has to get you some software code (like the one that Masimo used to activate the feature) onto an iPhone that connects with your Watch. They can do that in the form of a new app or, more likely, an update to the iPhone-side software that connects with the Watch. They could even execute it automatically for you as part of a Watch update, as you just get a benefit for free.
It’s not just very likely that Apple will do this if they win (or after the two patents underlying the ban expire): it would actually be a major surprise if Apple didn’t do it. The relevant Watch models that they currently sell in the United States could do pulse oximetry. Everything is on board. It just takes a change that is a small step for Apple but difficult enough for the rest of mankind that such a “significant alteration” wasn’t sufficient for Masimo to keep the ban in force and effect during the appeal.