Shares of MASI were up 2.1% to $122.57 apiece just before the market closed today on the back of the news.
The patent battle goes back as far as January 2020, centering around light-based pulse oximetry technology used by the watches. Masimo develops a number of technologies that use pulse oximetry, including its recently FDA-cleared W1 smartwatch.
A turning point in the long-running dispute came in October when the U.S. International Trade Commission (ITC) ruled in Masimo’s favor. The ITC recommended a limited exclusion order for infringing Apple Watches with light-based pulse oximetry functionality. It found that Apple violated U.S. laws by incorporating this patented technology in its products.
In December, Apple agreed to stop selling its Series 9 and Ultra 2 watches after the ITC ruling passed a Presidential review. However, this month, the company implemented a workaround that removed the pulse oximetry functionality in case its appeal failed. The appeal sought to hold off on the ban for the entirety of the appeals process, with the tech giant able to sell under an interim stay.
Bloomberg says the temporary stay expires at 5 p.m. Eastern time on Thursday, Jan. 18, and that the court denied Apple’s appeal to lengthen the stay.
The company issued a press release saying it welcomes the court ruling to lift the stay on the Apple Watch import ban. Masimo said it reinstates the ITC import ban and cease and desist order on Apple Watches infringing the Masimo pulse oximetry technology.
“The Federal Circuit’s decision to lift the temporary stay is a victory for the integrity of the American patent system and the safety of people relying on pulse oximetry,” said Joe Kiani, founder and CEO of Masimo. “It affirms that even the largest and most powerful companies must respect the intellectual rights of American inventors and must deal with the consequences when they are caught infringing others’ patents.”
The analysts’ view on the latest development between Apple and Masimo
BTIG analysts Marie Thibault and Sam Eiber believe the latest court ruling could improve the chances of an eventual settlement between Apple and Masimo. They suggested that the news of Apple’s workaround could have hastened the court’s decision.
“We expect Apple will begin selling the redesigned watches once the temporary stay expires tomorrow,” the analysts wrote. “We continue to think [Masimo] has the upper hand in this legal war but are uncertain of timing or exact likelihood of any potential settlement.”
Masimo’s statement on Apple’s removal of the pulse oximetry function called the move “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,” the statement issued earlier this week read.
Bloomberg previously said that Apple already shipped modified watches to U.S. retail locations.