New Apple Watch Infringes Denon/B&W Parent, Masimo's IP

Masimo vs Apple

It’s difficult to analogize Masimo as the proverbial David, but when Goliath is Apple Inc, it fits. Masimo is a highly successful medical devices company whose R&D has created groundbreaking technology in a niche called “non-invasive medical monitoring”, an area where wearable devices and blood analysis intersect, but without the bleeding. Masimo and its unique niche took the attention of the hi-fi audio world just last year when it purchased Sound United and its stable of brands that includes Denon, Marantz, Bowers & Wilkins and Definitive Technology among many more. Fortunately for us audio consumers, Masimo has proved a suitable steward to the legendary brands inherited through the acquisition.

Apple happens to be the biggest single smartwatch company by sales, reliably holding around 25% of the market share since 2018. As smartwatches became increasingly sophisticated at fitness monitoring and moved well beyond their past era of notoriously unreliable heart rate readings, it was only a matter of time before the wearable technology behind Apple Watch and Masimo would collide. 

Despite Apple’s sizable market share, smartwatches are still a fairly fragmented and possibly ill-defined market that includes a lot of smaller competitors that collectively own just under 60% of this growing product category. The large “Other” category speaks to a smartwatch market that's still a fairly egalitarian, wild-west that features a lot of disparate and potentially innovative niches. Filling one of those innovative niches is the Masimo W1 Sport watch that came out last May. The watch does real-time oxygen saturation (Sp02) monitoring and accurate pulse rate readings. The watch has been FDA approved for medical use, so those in need may even get one with health insurance benefits. If you consider the flaming hoops any new technology is put through for FDA approval, that’s a wrap, folks! Masimo owns the blood-oxygen watch market until another company can make something better.

Masimo W1 Sport Watch w/ Phone Display

Patent Infringement Fallout

Apple announced on Monday that it has halted sales of its new Series 9 and Ultra 2 smartwatches in the United States by order of the U.S. International Trade Commission. These new watches that have been shipping since late September were found to be using Masimo patents in its blood oxygen feature. The watches are still available outside the US, at least for now. 

"This is not an accidental infringement — this is a deliberate taking of our intellectual property." - Joe Kiani CEO Masimo 

Masimo CEO Joe Kiani is an outspoken business leader and philanthropist in the healthcare industry. By reputation Kiani’s gifted with the riz as the kids call it these days and he’s already delivered choice words to and about Apple: 

“Apple’s internal documents that we saw in court showed that they knew their product wasn’t good enough to be used medically and they didn’t even seek FDA clearance because of that. Their own testing showed they got two measurements a day on 37% of the people. That’s it! We get over 70K measurements a day on everyone. And they pushed it out anyway, because as their email showed, because they thought in the chaos of COVID. This is a quotation, that they could get market share away from Fitbit.” 

Watching the interview, it certainly sounds personal for Joe Kiani as he paints a grim picture of the San Bernadino computer company’s willingness to ship products despite premature technology. For Apple, increasing their smartwatch market share has become a bloodsport. Kiani continues: 

“So, why we sued them? Because this is our intellectual property. We have our own product… and we have been in the pulse oximetry business for 35 years, with consumers and in hospitals.”

Kiani goes on to cite the value-add of the Sound United acquisition as Masimo brings portable consumer versions of its technology out of the hospitals into the hands and wrists of consumers. Masimo now boasts a distribution channel with up to 20,000 locations since on-boarding Sound United’s consumer audio business. Kiani punctuates his consumer initiatives, saying: 

“We hope to pick-up a good market share for people that really care about pulse oximetry and people with chronic illnesses… they will benefit from a serious, accurate product.” 

Kiani more than implies that Masimo is serious about its consumer medical equipment’s potentially life-saving features, and that perhaps Apple is not. I can’t tell what seems to insult Kiani most, that Apple stole Masimo technology, or the potential risks of Apple’s unreliable implementation of Masimo’s technology for no more than entertainment value.

Masimo Extends the Olive Branch

Regarding his efforts to work with the computer goliath on a settlement before it came down to an ITC ruling, Joe Kiani said: 

“I put out the olive branch to improve their product… but they haven’t called. It takes two to tango.” 

Watch Masimo CEO Joe Kiani full Interview on Business Insider

Kiani said that he has NOT heard from Apple since 2013, then he says the computer company wanted to enter the non-invasive medical monitoring space. Apple apparently wanted to integrate Masimo technology into a new platform, either through acquisition of Masimo or hiring Joe Kiani himself. Instead, Apple recruited 25 Masimo engineers then, as we've seen, helped itself to Masimo patents. Thus far, Kiani and Masimo have heard nothing from Apple about its situation. 

A Bag-Full of Likely Outcome

It’s interesting to speculate that Apple may use this situation to finally buy Masimo outright. But this would follow a tremendous sunk cost after building its own wearable non-invasive medical monitoring technologies while making-off with Masimo’s patents. If for whatever reason this happened, it may leave fans of hi-fi audio mourning the fate of Masimo’s new audio brands. Apple doesn’t really need Masimo for its former Sound  United distribution chains and it obviously has no use for hi-fi audio. The company spent $3-billion in 2014 for what is essentially a marketing company that gets mediocre headphones assembled for them, and an Internet radio station for Apple Music. Do the kids that say “riz” even think Beats are cool anymore? 

The conspiracy guy in me might speculate that Apple’s Masimo purchase has already been secretly arranged and this whole patent infringement business was just a viral growth hack to increase the value of a next-gen, FDA approved Apple Watch. But I think Occam’s Razor would disagree. This has been a reputation disaster for Apple and Joe Kiani can’t be that good an actor to emote that level of indignation at Apple and its pale imitation of Masimo tech. 

One potential outcome that's more in line with Occam’s Razor, this is nothing that a big bag of money with Masimo’s name on it can’t fix. In ignoring the problem since 2013, Apple only made that bag bigger. As bad as it's been for Apple, the incident has been a PR boon for Masimo’s wearable medical monitoring technology, the kind of good advertising that not even a big bag of money can buy.

How do you think this Apple infringement on Masimo IP will get resolved? Please share your comments in the related forum thread below.

Dec 21, 2023 Update: Bloomberg is reporting that Apple engineers are busy tweaking the software inside the Apple watches to avoid Masimo patents, maybe just in time for last-minute Christmas orders. Boomberg says:

"It’s a high-stakes engineering effort unlike any Apple has undertaken before."

If Apple intends to retain the blood-oxygen monitoring feature in the new watches, there's a good chance this won't be enough to dodge Masimo's patent claims.