The latest legal slugfest between local medical device maker Masimo Corp. and its nemesis, Apple Inc., began last week in a Santa Ana federal courtroom.
In a civil trial before a jury of eight, Masimo is accusing Apple of violating a patent when selling its watch over a two-year period. Masimo says Apple owes it royalties of anywhere from $634 million to $749 million.
“They have made claims for hundreds of millions of dollars,” Apple lead trial lawyer Joseph Mueller told the jury in his opening statement. “The right number in this case is zero. We are not afraid of these claims.”
The two companies have had long-simmering disputes since 2013 when Apple approached Masimo about working together to build health-related apps for Apple devices.
They had a falling out and Apple was accused of poaching Masimo employees as well as stealing patents. A 2023 trial ended in a hung jury. Judge James Selna still hasn’t revealed his verdict after a follow-up bench trial last year.
The battle pits Masimo, which has a $7.8 billion market cap, against the world’s third richest company by market cap at $4 trillion (Nasdaq: MASI, AAPL).
A Watch Isn’t a Monitor
Masimo last week continued to be represented by its longtime attorneys, Joseph Re and Steve Jensen of Knobbe Martens, the second-biggest legal firm in Orange County by attorney count. The pair has won several big cases for Masimo over the past two decades, collecting hundreds of millions of dollars in settlements from medtech giants such as Royal Philips Electronics NV and Nellcor, now a unit of Medtronic PLC.
Making the opening argument last week was another Knobbe Martens partner, Brian Horne, who has previously won cases for Masimo and other well-known OC companies like Edwards Lifesciences.
The dispute centers on whether Apple used Masimo technology to detect heartbeats on about 43 million watches from 2020 to 2022 when the patent expired.
“Masimo is a company that revolutionized pulse oximetry,” Horne told the jury. If the jury finds Masimo was the inventor, “Apple has to pay Masimo a royalty.”
Apple’s Mueller, who works at the Boston office of WilmerHale LLP, has chaired trial teams in eight trials that each involved billion-dollar stakes, as well as two other trials that each involved multi-hundred-million-dollar stakes.
Mueller argued that the heart monitoring application on the Apple Watch was imperfect and couldn’t be relied on to identify heart rates all the time.
The application’s detection of high or low heartbeats doesn’t work well when the user is moving, he said. The application is “only available when a user isn’t moving for 10 minutes.
“The Apple Watch is not a patient monitor,” he said. “There is no infringement.”
The trial is expected to last about 10 days.
Last week, Masimo announced that its third-quarter revenue increased 8.2% to $371.5 million. It narrowed its forecast for 2025 sales to increase about 8.5% to 10% to $1.51 billion to $1.53 billion.
Company executives on last week’s earnings call didn’t discuss Apple.
The Kiani-Jobs Comparison
The dispute began in 2013 when Apple sought to install Masimo’s pulse oximetry technology on its watch. Email correspondence among Apple employees referred to Masimo co-founder and then-CEO Joe Kiani as having a Steve Jobs-like reputation within the medical technology development space.
Apple executives discussed acquiring Masimo and installing Kiani as vice president of Medical Technologies. Apple CEO Tim Cook nixed the acquisition because Masimo sold its equipment to hospitals and not consumers.
Apple ended the arrangement within a few months and instead decided to recruit about 25 Masimo employees, including its chief medical officer and an executive slated to become its chief technology officer. Apple denied it was poaching – and instead used the term “smart recruiting” – in email exchanges among executives.
Masimo originally filed the lawsuit against Apple in 2020 after discovering its technology was used in Apple Watches to monitor oxygen levels.
Masimo initially sought $3.1 billion and after more than half of its trade secrets were dismissed, reduced the request to $1.85 billion. A four-week trial took place in 2023 and resulted in a mistrial with a hung jury.
In the retrial, Masimo has dropped all requests for monetary damages and is seeking an injunction against the Apple Watch.
In recent years, Masimo has won a couple of significant court cases. The U.S. International Trade Commission ruled in 2023 that Apple violated a Masimo patent and had to stop importing its watches with the disputed technology. Apple has appealed the decision.
Separately, a Delaware jury last year found that Masimo’s current products did not infringe any of Apple’s patents. The jury did find that a discontinued Masimo product had violated an Apple product; the jury awarded $250 to Apple.
