Apple Sending Out Modified Apple Watches to Avoid Import Ban

While Apple awaits the ruling by a US appellate court on whether or not it will get an extended reprieve on the Apple Watch import ban, one piece of slightly good news is that its “Plan B” appears to have been approved by US Customs.

For those who haven’t been following the saga, the US International Trade Commission (ITC) ruled that all Apple Watch models that feature blood oxygen monitoring features infringed on two patents owned by Masimo, a California-based health technology company.

In today’s product lineup, that list includes the Apple Watch Series 9 and Apple Watch Ultra 2. However, it technically encompasses all mainstream Apple Watch models going back to the Series 6 — the model that first introduced the blood oxygen sensor. Only the entry-level Apple Watch SE is exempt since it doesn’t include the infringing technology.

As a result, the ITC issued a limited exclusion order (LEO) and cease and desist order (CDO) prohibiting Apple from importing or selling the Apple Watch Series 9, Apple Watch Ultra 2, and any other infringing models — which include refurbished units of the older Apple Watch Series 8 that were still available from Apple.

The ITC ban officially went into effect on December 25, following a mandatory 60-day window during which the White House can intervene to veto the ban. It’s rare for that to happen, so nobody was particularly surprised when the Biden administration said it would not intervene.

However, the ban ended up being in effect for less than two shopping days, as Apple quickly filed an appeal of the ITC ruling to the United States Court of Appeals for the Federal Circuit, where it was quickly granted a temporary stay on the ban pending a hearing on whether a longer-term stay would be granted until the full appeal of the ITC case could be heard.

The ITC naturally opposed the stay, insisting that the court reinstate the ban immediately. Today is the deadline for motions to be filed in support of an interim stay, so we could hear a final ruling as soon as tomorrow.

In the days leading up to the ban in December, several sources reported that Apple was frantically working on a software fix — a “high-stakes engineering effort” — that could allow the Apple Watch to remain on sale by removing any infringing technology at the software level. This would presumably take the form of a watchOS update. Still, many patent experts felt it was a long shot on the company’s part since the patents in question were focused on the hardware sensors in the Apple Watch, not necessarily the software that drove them.

Still, as one patent expert told Bloomberg, the patents were broad enough that Apple could make a case that the software is an essential part of the technology, such that changes to the software would remove any infringement upon Masimo’s patents.

The strategy appears to have paid off, with US Customs and Border Protection — the agency that enforces the ban and is therefore required to make the call on this — has decided that Apple’s software changes are enough. However, these changes are also somewhat of a “scorched earth” move on Apple’s part, as it hasn’t just tweaked the algorithms like some suspected it might — the company has disabled the blood oxygen monitoring features entirely.

Although US Customs didn’t share the information publicly, Masimo let the cat out of the bag in a series of court filings and statements to the press.

Apple’s claim that its redesigned watch does not contain pulse oximetry is a positive step toward accountability. It is especially important that one of the world’s largest and most powerful companies respects the intellectual property rights of smaller companies and complies with ITC orders when it is caught infringing.Masimo

As Masimo has hinted at previously, it considers Apple’s move as a tacit admission by Apple that the Apple Watch does indeed infringe on Masimo’s patents, which is why it’s announcing this decision positively.

Meanwhile, Bloomberg’s Mark Gurman notes that Apple has already begun shipping “modified” Apple Watch Series 9 and Apple Watch Ultra 2 models out to its US retail stores. There are likely the units with the blood oxygen sensing technology disabled; however, stores have been told to keep them in reserve and continue selling the standard models until told otherwise.

Apple’s operations team has already begun shipping modified Series 9 and Ultra 2 watches to retail locations in the US, likely in case the appeal fails this week. The stores were told not to open or sell the tweaked devices until they receive approval from Apple’s corporate offices. It’s possible that those models are the new versions without the blood-oxygen feature.Bloomberg

If the US Court of Appeals rules to grant a complete stay on the import ban this week, the Apple Watch Series 9 and Ultra 2 can remain on sale as-is until the full appeal of the ITC ruling has been heard — a process that could take a year or more. In that case, it’s unclear what will happen with the modified Apple Watch units that are on their way to retail stores, but they’ll either need to be sent back to Apple or altered in some other way in-store before they can go on sale.

On the other hand, should the court deny Apple’s request for a stay, Apple will again be forbidden to sell the Apple Watch Series 9 and Apple Watch Ultra 2 as we know them in the US. Instead, the modified ones will be unpacked and put on the shelves. These should be the same in every way except for the omission of the blood oxygen sensing features.

It’s less clear if this software update will be pushed to existing Apple Watch models. Nothing in the ITC order impacts those Apple Watches that have already been sold and are being used by customers, so Apple is under no obligation to disable the blood oxygen sensors retroactively — and will probably do everything it can to avoid this. Plus, this entire debacle applies solely to the Apple Watch models sold in the US; it’s business as usual in every other country where Apple products are sold.