Apple Inc. AAPL has appealed to a U.S. appeals court to reverse a ban on the import of certain Apple Watches. The ban was imposed following a patent dispute with medical-monitoring technology company Masimo Corporation MASI.
What Happened: On Friday, Apple requested the U.S. Court of Appeals for the Federal Circuit to overturn the U.S. International Trade Commission’s or ITC decision to ban the import of specific Apple Watches, reported Reuters.
Cupertino, California-based tech giant informed the Federal Circuit that the prohibition could not be upheld because the Masimo wearable, protected by the patents, was merely theoretical at the time of its ITC complaint in 2021.
Additionally, the technology company contended that Masimo’s patents lacked validity and that its watches did not violate them.
Masimo, based in Irvine, California, accused Apple of poaching its employees and stealing its pulse oximetry technology after discussing a potential collaboration. Apple introduced pulse oximetry to its Series 6 Apple Watches in 2020.
Following the ITC’s decision, Apple temporarily halted sales of the watches but later resumed them after the Federal Circuit paused the ban. The ban was reinstated in January, prompting Apple to remove pulse oximetry capabilities from the watches sold during the appeal.
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Why It Matters: The ban on Apple Watches was upheld by the White House in December 2023, impacting the company’s sales. Before the ban came into effect, the Tim Cook-led company discontinued sales of its latest Watch models — the Apple Watch Series 9 and Apple Watch Ultra 2, in the U.S.
The ban has had a significant impact on Apple’s operations and sales, prompting the company to take legal action to reverse the decision. Based on IDC’s shipment estimates, Apple distributed 43.9 million units of the Apple Watch in 2022, with an average selling price or ASP of around $466, resulting in total Apple Watch revenues nearing $20 billion.
Newer models like the Series 9 and Ultra 2 reportedly contributed to about 80% of the total shipments.
Experts suggest that since approximately 30% of global smartwatch sales occur in the U.S., the potential consequence of this ban could impact around $5 billion in sales, equivalent to approximately 1% of Apple’s total revenue.
The ultimate effect on the Cupertino-based tech giant maybe even less, contingent upon the duration of the ban and Apple’s ability to steer U.S. consumers towards older models.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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