Apple to fight Apple Watch ban in court after White House declines to act

WASHINGTON – Apple, seeking to defend a business that generates roughly US$17 billion (S$22.5 billion) a year, is appealing a US sales ban of its smartwatches after the White House refused to overturn the measure.

Apple will challenge the ban – imposed by the US International Trade Commission (ITC) over a patent dispute – at the US Court of Appeals for the Federal Circuit. On Dec 26, the company also filed an emergency motion seeking to lift the prohibition on watch sales while the court considers its appeal.

A patent dispute with medical technology maker Masimo has put Apple in the rare position of fighting to get one of its signature products back on store shelves. The ITC determined in October that Apple violated two Masimo health-technology patents with a blood-oxygen sensor in its watches. The White House had 60 days to review the import ban, with the decision resting with US Trade Representative Katherine Tai. The time on that review just ran out.

“After careful consultations, Ambassador Tai decided not to reverse the ITC’s determination and the ITC’s decision became final on December 26, 2023,” the Office of the US Trade Representative said on Dec 26 in a statement.

Apple had already stopped selling its Series 9 and Ultra 2 watches in its online store and US retail outlets. Online sales were halted Dec 21, and the last day to buy a new watch at an Apple retail store was on Christmas Eve.

“We strongly disagree with the USITC decision and resulting exclusion order, and are taking all measures to return Apple Watch Series 9 and Apple Watch Ultra 2 to customers in the US as soon as possible,” an Apple spokeswoman said. 

Apple has developed a software update for the Apple Watch that it believes will mitigate the issue. It has submitted the design of that update to the US customs agency and, in a filing on Dec 26, said the government is scheduled to decide Jan 12 whether to approve or reject the changes. A ruling in its favour may help Apple resume selling the watch models. 

The order against Apple includes a sales ban at its own retail channels as well as a prohibition on importing the devices into the United States. Other retailers, such as Buy Buy, Target and Walmart, can continue to to sell the products – at least until supplies run out.

The Series 9 and Ultra 2 models account for most of Apple’s watch sales. The lower-end Apple Watch SE, which doesn’t include the blood-oxygen feature, remains on sale. Apple told staff last week that due to the legal battle, they’re not allowed to tell customers the Ultra 2 and Series 9 remain on sale through non-official Apple retail channels. 

In a potential headache for owners of the Apple Watch Series 6, 7 and 8 – all of which include the blood-oxygen feature – out-of-warranty watches won’t be eligible for hardware repairs until the ban is lifted.

The timing of the ban means the measure probably won’t have a major impact on the company’s holiday season results. It’s likely that most people completed their shopping prior to Christmas, and some may have rushed to buy watches after Apple began warning in recent days that the ban was coming. 

Investors have largely taken the episode in stride. Apple shares were little changed on Dec 26, closing at US$193.05 in New York. The stock has gained 49 per cent this year and reached a record high earlier this month.

Masimo shares increased 2.2 per cent on Dec 26 to close at US$120.62. The stock has jumped 25 per cent in December and is on pace for its best month since 2007. 

The White House didn’t heavily publicise the dispute ahead of Dec 26’s statement, but has made antitrust enforcement one of its central policies – with President Joe Biden saying regularly that competition is a pillar of healthy economies. 

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