Is Apple stealing tech from small companies?

Apple is hitting pause on selling two of its newest smartwatches, the Series 9 and Ultra 2, due to a patent dispute.

What's the dispute all about? Let's break it down for you.

Way back in 2013, a smaller medical tech player, Masimo, cracked a big problem in the medtech scene – inaccurate blood oxygen measurements. Before Masimo's genius solution, the existing tech needed patients to stay super still for accurate readings. 

Imagine trying to do that all the time – not practical, right?

Masimo's bright idea involved transmitting light through body tissues, reading how blood with or without enough oxygen absorbs light differently. Sensors pick up on this, giving an accurate reading.

Apple, in its early days of building wearables like watches, noticed Masimo's breakthrough and wanted in. They approached Masimo for partnership talks, wanting to use this tech in their new products. But things turned bad for Masimo real quick.

Apple didn't seem interested in a partnership; they just wanted the tech. They started poaching away key Masimo employees, including the Chief Medical Officer.

Fast forward, these ex-Masimo employees began working for Apple, even filing patents behind Masimo's back. Patents are like official claims saying, "Hey, we invented this first!" And guess what? Apple's patents looked a lot like what Masimo had applied for back in 2002.

Apple eventually released devices with this blood oxygen reader tech, and that's when Masimo took action. They filed a lawsuit in 2020, accusing Apple of stealing their trade secrets. The jury couldn't decide, so it ended in a draw.

Masimo went on the offensive in 2021, filing a complaint with the US Trade Commission. Finally, the commission ruled in favor of Masimo, stating that Apple violated their patents. 

The result?

Apple can't sell the affected Apple Watches anymore.

This is a big hit for Apple, considering their wearables, home, and accessories business, which includes AirPods and Watches, rakes in over $40 billion a year. Watches alone contribute 40% to this segment's revenue.

But, hold on, is Apple the innocent tech giant we all love?

Well, not exactly. Apple has a bit of a reputation for being a bully. 

This isn't the first time Apple's faced patent drama. In 2016, a company called AliveCor created an accessory that could run an electrocardiogram (ECG) when paired with the Apple Watch. Apple had a look, and then introduced the ECG tech directly into its Watch a couple of years later, making AliveCor obsolete. AliveCor complained, claimed patent infringement, and won. The Apple Watch with ECG monitoring was banned.

But Apple didn't back down. They went to the patent board, tried to strike down AliveCor's patent, and succeeded. Sales continued, and AliveCor was left holding the bag.

Now, with Masimo in the ring, it's a $6 billion company against a $3 trillion one. And you bet this will be a battle for the ages, with many cheering for the underdog, Masimo! 

Until then...

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