Late-night email to CEO Tim Cook set Apple Watch saga in motion

LOS ANGELES – At about 1am California time in 2013, a scientist emailed Apple chief executive officer Tim Cook with an irresistible pitch.

“I strongly believe that we can develop the new wave of technology that will make Apple the No. 1 brand in the medical, fitness and wellness market,” he wrote in the email, which was later included in legal documents. Some 10 hours after the message was sent, an Apple recruiter was in touch. And just weeks after that, the engineer was working at the tech company on a smartwatch with health sensors.

Within a few months at Apple, the employee asked the company to file about a dozen patents related to sensors and algorithms for determining a person’s blood-oxygen level from a wearable device. But this wasn’t just any engineer. He had been the chief technical officer of Cercacor Laboratories, the sister company of Masimo, which went on to get the United States to ban the Apple Watch.

Apple’s decision to hire this technical whiz – a Stanford engineering Ph.D. named Marcelo Lamego – is seen as the spark that sent Masimo’s lawyers after Apple. While the iPhone maker denies it did anything wrong, Masimo cited the poaching of employees as part of claims that the iPhone maker infringed its patents. The dispute culminated this month in Apple having to pull its latest watches from the company’s US stores, hobbling a business that generates roughly US$17 billion (S$22 billion) in annual sales. A US appeals court on Dec 27 temporarily halted the ban on Apple Watch sales.

Masimo, a relatively obscure maker of medical devices based in California, argues that Mr Lamego seized its prized asset – the ability to noninvasively and accurately capture the level of oxygen in a person’s blood – and took it to Apple. The feature ultimately helped turn the watch into more of a health device, solidifying its status as the wearable industry’s best-selling product.

Mr Lamego joined Masimo in 2003 as a research scientist before becoming Cercacor’s tech chief around 2006. Cercacor was a spinoff of Masimo, and both companies are run by CEO Joe Kiani, who helped invent much of their core technology.

Lawyers for Masimo say that Mr Lamego lacked prior knowledge about how to develop the blood-oxygen feature. He learned how to build the technology at Mr Kiani’s companies and delivered it to Apple, they say.

Mr Lamego then resigned from Apple in July 2014, just months after joining. Masimo argues that he left after Apple got what it needed. The reality, according to a longtime Apple executive is that Mr Lamego didn’t fit in at the company. He clashed with managers, demanded multimillion-dollar budgets and wanted the ability to hire his own engineers without approval.

Apple first approached Mr Lamego to join about a year before his email to Mr Cook. The overture happened around the time executives from Apple and Masimo met in 2013, a moment that has become another focal point in the dispute between the two companies. Mr Lamego declined to join Apple at the time, but his tune changed after Mr Kiani refused to make him the CTO of Masimo as well, lawyers for the medical company argue.

When Apple met with Masimo, it was seeking technology and talent that could bolster its work on the watch. At the time, Masimo believed Apple was interested in doing a deal. The company alleged in a 2020 lawsuit that Apple used the meeting to instead learn about its technology and lay the groundwork for hiring its people. In addition to enlisting Mr Lamego, Apple hired Masimo’s former chief medical officer and about 20 other staffers, the medical device company said. Masimo failed to convince a jury of its claims this year.

After his stint at Apple, Mr Lamego ended up starting his own company, True Wearables. In 2016, he released a device called the Oxxiom, which he called the world’s first continuous and disposable blood-oxygen sensor. Masimo sued the start-up and won a court order blocking it from selling the product.

When Masimo filed its initial lawsuit, Apple hadn’t yet brought a blood-oxygen sensor to market. But eight months later, the Apple Watch Series 6 was introduced with the feature – known in the industry as pulse oximetry – as its key new addition. That led Masimo to file a separate complaint with the US International Trade Commission in 2021 alleging that the feature infringed its patents.

The ITC concurred in October and ordered Apple to remove infringing models from the US, including the current Series 9 and Ultra 2. That prohibition took effect this week after the White House declined to intervene. Apple said it strongly disagrees with the ITC decision and is “taking all measures to return Apple Watch Series 9 and Apple Watch Ultra 2 to customers in the US as soon as possible.”

Many companies have made arguments that Apple has stolen their technology and poached staff, putting them out of business or sending them into bankruptcy. But they’ve rarely gotten much traction.

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