4 things to know about the Apple Watch fiasco
By Samantha Murphy Kelly, CNN
New York (CNN) — It will soon become a lot harder to find the latest Apple Watch models in the United States.
Apple said Monday it will stop selling some versions of its bestselling smartwatch starting later this week to get ahead of what could be one of the most momentous patent disputes in quite some time.
The unprecedented decision to remove a hugely popular product from store shelves stems from a recent ruling by the International Trade Commission that found Apple was in violation of medical company Masimo’s pulse oximeter patent. That technology uses light to read blood-oxygen levels. Apple introduced a pulse oximeter feature utilizing that method in 2020 in its Apple Watch Series 6 lineup.
Now Apple faces the possibility of having these models banned unless Apple makes substantial changes to the way the Apple Watch works – or if the ruling is vetoed by President Joe Biden during a review period. Although the review period doesn’t end until December 25, Apple said it is “preemptively taking steps to comply should the ruling stand” by removing some from the market.
Here’s a closer look at everything you need to know:
What models will be unavailable?
Apple told CNN it will no longer sell its Apple Watch Series 9 and Apple Watch Ultra 2 in the United States, starting Thursday on Apple.com and from retail locations after December 24.
Other models will remain available for purchase for now, but if an import ban is approved, other versions will be hard to come by, too. This would include the Apple Watch Series 6 and later, and all models of Apple Watch Ultra. A ban will not impact sales of the Apple Watch SE, according to Apple. Some retailers, including Best Buy, told CNN it still has plans to sell the devices.
If the order stands, Apple said it will “continue to take all measures” to make it available for customers “as soon as possible.”
Why is Apple doing this?
Apple’s decision to take one of its most popular products off the shelf follows an ongoing dispute with Masimo over its blood oxygen feature. Apple has routinely marketed its smartwatch as a life-saving device, which has helped make the Apple Watch the most popular watch sold around the world, but its skirmish with Masimo threatens to undermine that.
Nearly two months ago, the ITC found several Apple Watches infringed on Masimo’s pulse oximeter patents, sparking a review period that would allow Apple to make a licensing deal with Masimo or appeal to veto the ban.
Masimo CEO Joe Kiani told CNN that Apple has not approached the company for a licensing agreement or a settlement but that he is open to both.
Meanwhile, Apple said it firmly believes the ITC’s findings are inaccurate and should be reversed. It also plans to take the decision to the Federal Circuit. In addition, Apple said it has submitted evidence demonstrating how a ban would negatively impact healthcare, scientific and medical research, and Apple Watch users who rely on the ECG, blood oxygen and other health-related features. Pulse oximeters can be particularly helpful for people with various health conditions, including asthma, lung cancer and heart failure.
Kiani said he believes the decision to halt the sale of the devices is the latest salvo in the ongoing patent fight. Masimo has also argued in court that Apple poached more than two dozen of its employees before launching its W1 medical smartwatch in May 2022.
The entanglement further intensified last year when the Apple Watch maker filed two patent infringement lawsuits against Masimo, claiming the company copied patented Apple Watch features for its W1 device.
Why is President Biden involved?
President Biden has 60 days to review the ITC’s ruling before a ban could go into effect. It’s not the first time a president has had to step in over a patent issue involving Apple.
In 2013, President Obama vetoed an ITC ruling to ban older iPhones and iPads after it determined Apple was in violation of one of Samsung’s patents. It was the first time the administration had overturned an ITC ban in more than 25 years, according to the New York Times.
Does this matter to Apple?
According to Jitesh Ubrani, a research manager at market research firm IDC, Apple’s reputation is on the line. “It’s not a good look,” he said. “There may be an impact on sales in the first quarter of next year, but at the end of the day, no one wants to be caught infringing on patents.”
He said Apple’s decision to remove the devices before the end of the review period aims to “put them in a better light.”
“It shows they want to comply with the law the best they can while still being fiscally responsible,” Ubrani added.
As for sales, David McQueen, a director at ABI Research, said the decision to leave the watches available for purchase in stores until December 24 should help soften the financial impact of the blow of the move, giving shoppers a few days left to buy the devices ahead of Christmas.
“While Apple is the lead player in the sector with around a 24% market share, it may not actually affect its business too much if it can boost sales in these final few days, assuming there is available stock,” he said. “It may be able to ride out the holiday season without too much of an impact on sales.”
Apple sold 49 million smartwatches in 2022 and about 26.7 million in the first 9 months of 2023.
“It will be interesting to see how long the dispute will last, or when Apple opens its wallet, and when the ban will be lifted,” he added.
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