Just days before Christmas, Apple is yanking some versions of its popular smartwatch from the shelves while it tries to resolve a bitter patent dispute with a rival company.
Here's the deal: The feud centers on the watches' pulse oximeter feature that uses light-based technology to read blood-oxygen levels. That tech is crucial to Apple's sales pitch that its watches can be life-saving. But it is also patented by a California-based medical-technology company called Masimo.
Back in October, the International Trade Commission ruled in Masimo's favor, saying that Apple violated the patent.
Apple disagrees with the ruling, of course, but it is preemptively suspending sales of certain Apple Watch devices — the Series 9 and Ultra 2 — to make sure it's in compliance with a US import ban that's scheduled to go into effect Christmas Day.
The import ban isn't a done deal. The Biden administration has until December 25 to overturn the October order if it disagrees with the ruling. And Apple could potentially implement a software update that allows it to skirt the tech in dispute.
"Apple strongly disagrees with the order and is pursuing a range of legal and technical options to ensure that Apple Watch is available to customers," Apple said in a statement.
Big picture
This patent war has been going on for years, my colleague Samantha Murphy Kelly writes.
Masimo CEO Joe Kiani told CNN he believes Apple's decision to halt the sale of the devices is merely a tactic to put pressure on the Biden administration.
"This has been a deliberate infringement," Kiani said.
Earlier this year, the Wall Street Journal reported that Masimo and several other companies accused Apple of ripping off their technology, allegations Apple denies.
"When Apple takes an interest in a company, it's the kiss of death," Kiani told WSJ. "First, you get all excited. Then you realize that the long-term plan is to do it themselves and take it all."
Bottom line
The Masimo dispute is a thorn in Apple's side, but investors aren't sweating the potential sales impact too much. Apple's stock, up 57% from January, fell less than a percentage point Monday.
David McQueen, an analyst at ABI Research, said the decision to leave the watches available for purchase in stores until December 24 should help soften the financial impact, giving shoppers a few days left to buy the devices ahead of Christmas.
Apple, he said, "may be able to ride out the holiday season without too much of an impact on sales."
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