Context: The Apple Watch import ban is not presently enforceable as an interim stay was granted by the United States Court of Appeals for the Federal Circuit (previous article on this dispute). The interim stay will have to be replaced with a longer-term one in the coming weeks or the ban enters into force again. However, the commercially more important decision is expected to be made by U.S. Customs and Border Protection (CBP) before the weekend (previous article discussing the potential approval of a workaround) and may practically resolve the dispute.
What’s new: The United States International Trade Commission (USITC, ITC) and complainant Masimo filed their opposition briefs to Apple’s motion for a stay pending the entire appellate proceedings (i.e., roughly a year if not more). Both the ITC’s “infringer” rhetoric and its insensitivity to Masimo’s clear abuse of the U.S. patent system are striking.
Direct impact: The interim stay may have been all that Apple needed (provided that its workaround gets approved). In the event that a stay pending the entire appellate proceedings remains desirable for Apple to obtain, the ITC and Masimo make pretty much the same arguments, suggesting that Apple’s appeal is not likely to succeed. It’s possible that the stay will be lifted, and if the workaround gets approved, it actually should be. But those filings by the ITC and Masimo merely raise doubts and do not show that Apple’s appeal will fail.
Wider ramifications: The ITC has every right to defend its ruling as well as its denial of Apple’s request for a stay, but the way the U.S. trade agency acts here validates critcis who have been suggesting for a long time that the ITC prioritizes its institutional interest in attracting many patent enforcement actions over its actual mission. Furthermore, Masimo’s abusive conduct should give U.S. policy makers pause as the system of “continuations” is out of touch with the rules of other major jurisdictions and in need of reform.
In the first paragraph of its opposition brief to Apple’s motion for a longer-term stay of the Apple Watch ban, the ITC says “[Apple’s] arguments amount to little more than an indisputably adjudicated infringer requesting permission to continue infringing the asserted patents.”
If the facts warranted that portrayal, one would have to applaud the ITC for standing up to America’s richest company in defense of a small innovator’s rights. Apple sometimes engages in bullying, but the ITC’s attack is gratuitous, disingenuous and irresponsible. It makes mockery of what the Founding Fathers had in mind when they wanted the patent system to promote “the Progress of Science and the Useful Arts.”
The ITC’s own record shows that
- Apple created the accused pulse oxymetry technology independently and
- Masimo tactically designed the patents-in-suit after Apple’s independent innovation, and more than 10 years after the original applications, in order to read on the relevant Apple Watch feature.
Masimo, which just failed to revive two patents that are not underlying this ban but being at issue in another procedural context (Federal Circuit opinions 22-1894 and 22-1895), can’t make any serious allegation of intellectual proprty theft. What Masimo tells again is the old story of a 2013 contact with Apple to discuss a partnership, which resluted in Apple hiring Masimo’s Chief Medical Officer and the Chief Technical Officer of a Masimo spin-off named Cercacor. That kind of thing happens all the time. Any small company must at all times be careful about large corporations potentially poaching their employees. The major shareholders of such small companies must create strong incentives for key talent to stay on board (stock options and other opportunities).
The ITC rejected Apple’s prosecution laches argument about Masimo having waiting for such an outrageously long time to then craft patent applications based on Apple’s actual product. But even Masimo’s opposition brief concedes that the ITC had discretion in this context: the trade agency could have decided otherwise.
The ITC’s ignorance concerning Masimo’s abusive conduct and unreasonable rhetoric against Apple (in fact, Masimo’s filing does not contain the word “infringer”) raise questions.
One can criticize Apple’s heavy-handed rule over its walled garden or its treatment of actual and potential suppliers in other contexts, but between Apple and Masimo, the former is an independent innovator and the latter is an abuser of a U.S. patent filing rules that were meant to give inventors a fair chance to optimize filings, not to manufacture an infringement case after the fact.
ip fray takes note of some very respectable IP professionals’ sympathy for Masimo and their perception of Apple as a defendant abusing its resource advantage over the vast majority of patent holders, yet believes there are case-specific reasons here to blame Masimo, not Apple. Blatant abuse of U.S. patent filing rules is ultimately not in the interest of the IP community and not good for the health of the IP system. The focus must remain, to quote the Founding Fathers again, on promoting the progress of science and the useful arts. Filing a patent application based on an old application more than a decade later, and just weeks after someone else releases an independently created technology, does nothing to promote innovation.
The real battlefield is the CBP decision on whether Apple’s workaround keeps clear of infringement. In a heavily redacted (not Masimo’s fault) footnote, Masimo appears to suggest that the workaround still infringes, but Masimo’s filing with the Federal Circuit can’t go into details “because Apple required Masimo not use any part of the CBP proceeding in any other proceeding.”
If Masimo loses the workaround determination, then it may end up never getting a cent, and will instead have lost a lot of money on legal fees. Given Masimo’s opportunistic and abusive patenting strategy, that outcome would be in the public interest and would completely vindicate Apple’s course of action. But for lack of information on the workaround, ip fray can’t predict that this necessarily will happen. It is, however, possible to deduce from Apple’s history of dealing with patent infringement assertions that Apple would not have submitted a workaround for approval by CBP without being reasonably confident of its chances.
There is no comment to add at this point, given that the stay may become irrelevant shortly. Here are the ITC’s and Masimo’s filings: