By Mark Gurman | Bloomberg
Apple is removing a blood-oxygen feature from its latest smartwatches — the Series 9 and Ultra 2 — to get around a US ban stemming from a patent dispute with Masimo Corp.
The disclosure was made Monday by Irvine-based Masimo, which said that US Customs and Border Protection approved the change on Jan. 12. The agency “decided that Apple’s redesign falls outside the scope” of an import ban by the US International Trade Commission, signaling that the adjustment will let Apple keep its watches on the market.
The ITC had ruled in October that Apple’s devices violated Masimo patents related to blood-oxygen measurement. That led Apple to pause sales of the smartwatches just ahead of Christmas, though an interim stay allowed the company to bring the products back late last month.
The iPhone maker developed a software workaround intended to sidestep the dispute and presented the solution last week to the customs agency, which is in charge of enforcing import bans. Apple explained that the redesigned watches “definitively” do not contain the technology at issue, known as pulse oximetry, according to Masimo.
The customs agency hasn’t publicly published its decision, but shared it with the parties. Apple and Masimo didn’t respond to requests for comment.
Removing the technology from the Apple Watch was a dramatic step. The company’s engineers have been working on a software update that changes the blood-oxygen app and its algorithms in a way that might circumvent the issue without losing the feature.
But eliminating the capability was likely the quickest way to avoid seeing the ban reimposed, which could have occurred as early as this month.
“Apple may have paid a steep price to get around a US import ban,” Bloomberg Intelligence analyst Tamlin Bason said in a note. “That was a highly touted feature.”
Though addressing the immediate risk of a ban is positive, the move “could dent customer demand,” Bason said.
Apple’s operations team has already begun shipping modified Series 9 and Ultra 2 watches to retail locations in the US. 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.
Separately, a federal appeals court is expected to hear an Apple motion as early as this week for a continued stay on the ban. The prohibition was overturned on an emergency basis while Apple waits for a hearing.
Last week, the ITC urged an appeals court to reject “weak and unconvincing” arguments supporting a bid to block the trade agency’s enforcement of the ban.