Apple has launched a $17 billion rescue mission to save its smartwatches from being banned in the United States over allegations of patent infringement.
Engineers will use the money to fine-tune how the devices' algorithms measure oxygen saturation and display the data to users before time runs out on December 24.
That's when all Apple Stores in the US must stop selling the Series 9 and Ultra 2 models following an order from the US trade watchdog, which ruled that the tech giant stole copyrighted technology.
The blood oxygen feature is at the center of a legal dispute involving Apple and California-based biotech company Masimo, which says Apple ripped off its employees and stole intellectual property rights for use in its own devices.
Apple has launched a $17 billion rescue mission to save its smartwatches from being banned in the United States over allegations of patent infringement.
Apple will stop selling watches on its website on Thursday and will pull the devices from its approximately 270 outlets by December 24.
But customers who have placed orders can pick them up in stores before the deadline.
The move is expected to lose Apple about $200 million during the holiday season.
The company's wearables industry has revenues of about $18 billion annually.
If the White House does not veto the ban, Apple will have to wait until 2028 to begin sales because that is when Masimo's two patents expire.
The company's retail locations have already been asked to replace signage with wearables, promoting the device without displaying images of the Series 9 and Ultra 2 — Apple's latest smartwatches that are the focus of the ban.
Report from Bloomberg Apple unveiled the rescue mission, saying Apple could settle with Masimo, the Irving-based company that filed the lawsuit, but that such a move is unlikely.
Engineers are said to be racing to fine-tune how the devices' algorithms measure oxygen saturation and display the data to users before the clock runs out on December 25 – Christmas Day. The complete ban will prevent Apple from importing new Series 9 and Ultra 2 devices
Masimo's patents focus on hardware, not software, that shines light onto the skin to collect data about blood oxygen levels, something that would be difficult for Apple to solve with the sensors already in the Apple Watch.
The exact details of the software changes are unknown, but industry experts expect Apple to change the algorithms enough to address patent infringements.
However, Masimo's patents focus on hardware, not software, that shines light on the skin to collect data about blood oxygen levels.
Massimo told Bloomberg that fixing the software would be an insufficient remedy and “the hardware needs to change.”
If Apple changes the algorithm, the modifications could reduce that accuracy or change the functionality of the sensor, making the feature irrelevant.
The report also noted that if Apple has to replace the devices, it will take at least three months to produce and ship the corrected models.
According to the company's website, Massimo founded Joe Ciani in 1989 and spent $60 million fighting Apple in court.
Trading fell by more than five percent on Monday after news that Apple would discontinue its smart watches.
According to the company's website, Masimo, founded by Joe Kiani in 1989, holds thousands of consumer-focused health care patents.
Data indicates that Massimo's company is worth $6.69 billion, and Kayani's net worth is $1.3 billion.
Trading fell by more than five percent on Monday after news that Apple would discontinue its smart watches.
The dispute began in 2013 when Masimo met with Apple to discuss possible collaboration for the Apple Watch project.
But Apple chose not to join Masimo because of its focus on hospital products, which is not in line with the tech giant's consumer-focused model.
Masimo sued Apple in federal court in 2020 and again in 2021 after the release of the Apple Watch Series 6, the first model to have the blood oxygen feature.
The company alleged that Apple infringed two patents related to hardware used in the Apple Watch's sensors.
According to Forbes, Kayani spent $60 million fighting Apple in court.
The International Trade Commission, which is responsible for cracking down on unfair trade practices, issued its order in October, beginning a 60-day presidential review period, which is scheduled to end on December 25.
The Biden administration could veto the ITC ban, but the White House has not acted.
The complete ban will prevent Apple from importing new Series 9 and Ultra 2 devices into the US, leaving only the lower-end SE models available for purchase.
A Masimo spokesperson told DailyMail.com: “After a comprehensive, multi-year legal investigation, the ITC found that Apple infringed some of Masimo's patented innovations for measuring blood oxygen.
“The decision to exclude some foreign-made models from Apple Watch demonstrates that even the most powerful company in the world must abide by the law.
“The ITC’s expert judgment on this matter must be respected, intellectual property rights protected, public confidence in the U.S. patent system maintained and American industry encouraged.”
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