Apple has halted sales of its Series 9 and Ultra 2 smartwatches in the US starting this week due to a legal dispute over the technology enabling their blood oxygen capability.
The move follows an October order from the United States International Trade Commission (ITC) that might prevent Apple from importing its Apple Watches because the devices infringe on the patent rights of medical technology startup Masimo.
Apple shares were down 1.4% after the news.
President Joe Biden is reviewing the verdict until December 25, but Apple has stated that it is taking efforts to comply if the ruling is upheld. The White House did not respond.
The prohibition would take effect on December 26.
The business announced that sales of the watches would be suspended from its website beginning December 21 and via Apple retail locations beginning December 24. Other models that lack the blood oxygen sensor, such as Apple’s lower-cost Apple Watch SE, are untouched by the disagreement.
According to Ryan Reith, program vice president for IDC’s mobile device monitoring activities, U.S. Christmas sales of Apple Watches will not suffer, and the true impact of the verdict, if it stands, will come in January and February, which are historically some of Apple’s worst sales months in the United States.
“Apple has plenty of inventory of the Watch 8 and SE, so they will have products available during that time,” Reith said in a statement. “The bigger implication is around whether or not Apple can use the blood oxygen sensor technology that is in question on future devices, or if they’ll have to reach a settlement or come up with a new solution.”
Masimo CEO Joe Kiani told CNBC in October that he was willing to negotiate a deal with Apple.
According to Counterpoint Research, Apple controls roughly a quarter of the global smartwatch market, a figure that rises to more than a third in the fourth quarter during the U.S. and European holiday sales seasons. Both the Series 9 and the Ultra 2 would be available for purchase outside of the United States, including during Asia’s Lunar New Year celebrations.
Apple believes the ITC’s ruling is incorrect and should be reversed, and plans to appeal the decision to the Federal Circuit.
Masimo has accused Apple of poaching its staff and integrating their pulse oximetry technology into the popular Apple Watch.
A jury trial on Masimo’s charges in federal court in California resulted in a mistrial in May. Apple has separately sued Masimo for patent infringement in Delaware federal court, calling Masimo’s legal activities a “maneuver to clear a path” for its own competing smartwatch.
The US Patent and Trademark Office denied Apple’s requests to evaluate the validity of the patents at issue in the ITC ruling earlier this year.
Since 2013, when President Barack Obama’s administration overturned an import ban on Apple’s iPhones and iPads due to a patent dispute with Samsung, no presidential administration has vetoed an ITC verdict.
In February, the Biden administration did not veto a separate import ban for Apple Watches, which was based on a patent-infringement complaint filed by medical technology company AliveCor. For other reasons, the ITC has put the prohibition on hold.
According to a company report, Apple’s wearables, home, and accessories division, which includes the Apple Watch, AirPods headphones, and other items, generated $8.28 billion in revenue during the third quarter of 2023.
Why did Apple stop selling the Series 9 and Ultra 2?
Apple will permanently halt sales of the Apple Watch Series 9 and Apple Watch Ultra 2 due to a patent dispute, with the website and stores halting sales on December 21 and 24, respectively.