Apple Inc., the world’s most valuable publicly traded company, in 2013 approached Irvine-based healthcare device maker Masimo Corp. about using its technology in Apple watches.
The two companies never reached an agreement. Apple at a later date began selling watches with technology similar to Masimo’s. In 2020, Masimo sued Apple for trade infringement, among other allegations.
Last June, Masimo also filed a complaint with the U.S. International Trade Commission (ITC) against Apple, seeking to stop its imports of watches. The ITC investigation is scheduled to be completed next January.
Apple denies the allegations and has sought the dismissal of the cases.
In a court hearing last October, a judge blasted an Apple attorney from the San Francisco office of Gibson Dunn & Crutcher for misleading the court, and compared Apple’s actions to Three Card Monte by trying to conceal the importance of an email from its Chief Executive Tim Cook (see story, page 28).
Masimo is represented by Joseph Re and Steve Jensen of Irvine-based Knobbe Martens, No. 1 on the Business Journal’s annual list of the largest law firms in Orange County (see list, page 40), with 148 local attorneys.
Re was the winning lawyer for Masimo in a case that caused Royal Philips Electronics to pay $300 million in 2016, and $1 billion against Medtronic PLC in 2006. The latter deal helped pave the way for nearly $8 billion-valued Masimo (Nasdaq: MASI) to go public in 2007.
Masimo founder and Chief Executive Joe Kiani last year told the Business Journal he has no intentions of settling the Apple case. The company earlier this year announced an acquisition expected to boost its products’ presence in the consumer market.
While Masimo didn’t record litigation awards, settlements or defense costs in its most recent annual filing, it did say it now has accrued legal fees of $7.1 million, up 76% from 2020.
Locals Take on Apple, Tesla, Medtronics, Others
Orange County’s biggest publicly traded companies are taking on some of the world’s better-known businesses, from Apple to Medtronic to Tesla, in court.
Recently filed annual reports from the area’s largest public companies detail prominent corporate lawsuits they are involved with, sometimes as defendants, other times as plaintiffs.
The reports also detail settlements and other legal expenditures that can get into the hundreds of millions of dollars in some cases.
By most accounts, the companies have more than enough cash to weather the lawsuits.
What follows is a summary of notable legal issues facing some of Orange County’s most valuable publicly traded companies.
Judge: Apple CEO’s Forwarded Email ‘Spoke Loudly by Not Speaking’
Apple Chief Executive Tim Cook received an unsolicited email at 12:54 a.m. on an October night in 2013.
Marcelo Lamego, who was at that time being groomed to become Masimo’s chief technical officer, asked Cook for a job in that email. Lamego was soon contacted by the company, and was eventually hired at Apple, where he stayed six months.
Masimo and its legal team contend that Lamego’s email is a smoking gun in its trade theft case against the tech giant.
While Cook made no comment to the email, he forwarded the email to top executives, which Magistrate John D. Early found significant, according to a transcript of a court hearing held last October.
The email was “unsolicited in the sense that Mr. Cook didn’t ask for it, but people from Apple contacted Mr. Lamego, and he dealt directly with Mr. Cook,” Judge Early said.
“Why did (Lamego) deal directly with Mr. Cook? Well, maybe there’s a—we’re now getting into Mr. Lamego’s head, but maybe there’s a bit of an inkling in that last second-to-last paragraph. ‘Please keep this confidential.’ He’s going to the top.”
The judge continued:
“I’m going to go out on a limb that if Mr. Cook got an email at 12:53 a.m. and forwarded it to the head of HR and the head of the, what is it, the Health Sciences Division, at what was it, like 7:00 a.m?
“You’re talking about that’s an immediate turn around, and it’s not just going to an assistant or going to someone. It’s going to the head of HR and the head of the relevant department. So, he did put thought into it.
“He didn’t just slough it off. He picked two critical people that bear directly on what plaintiffs are alleging, and he did it almost instantaneously considering the time it came in. And one of those people almost instantaneously reached back out to Mr. Lamego within a couple of hours.
“Sometimes when the CEO of the world’s largest company forwards, without comment, an email about an unsolicited email from the chief technology officer from a competitor or potential competitor to the head of HR and the head of the Health Sciences Division, that speaks loudly, even if there isn’t anything written in text in the email.
“That email goes to the heart of, as it relates to the trade secret case the relevant information that at least at one time was in his email string, and that again, by not speaking, he spoke loudly; by how quickly he forwarded it and to whom he forwarded it to shows that he did have some knowledge” about Masimo’s allegations.
