Apple Watch Patent Reopening: Growth Resilience Tested Amid Masimo Dispute

Apple faces fresh legal fire over its Apple Watch blood oxygen technology as the U.S. International Trade Commission (ITC) has reopened proceedings to assess whether the latest models infringe Masimo's patents. This new investigation, launched in November 2024 according to Reuters, targets Apple's redesigned feature reintroduced in August 2024 after temporary disabling, aiming for a six-month ruling that could again halt imports or restrict functionality by May 2025 as reported by CNews. Masimo, seeking up to $749 million in damages from a separate California jury trial, argues Apple's adjustments didn't fully divest its patented blood-oxygen sensing methods. The stakes are high: a repeat import ban could disrupt supply chains and strain Apple's premium wearables segment, already lagging behind competitors in health tech innovation. Yet Apple counters with a $250 million victory in a Delaware design patent case and ongoing trade-secret litigation, signaling resilience against Masimo's aggressive patent enforcement. While the ITC's potential restrictions loom, the broader market may weigh Apple's entrenched ecosystem and brand loyalty more heavily than this legal skirmish alone.

The legal battles surrounding Apple's health technology demonstrate both the risks inherent in cutting-edge innovation and the company's remarkable capacity to adapt. A recent federal jury verdict ordering Apple to pay Masimo $634 million for patent infringement related to blood oxygen monitoring on the Apple Watch initially threatened to undermine a key growth driver in wearables. The dispute escalated to a U.S. import ban on affected Watch models in late 2023 and early 2024, a significant setback for a segment already showing strong momentum. However, Apple's response reveals core elements of its adaptive capacity: the company swiftly developed a 2025 workaround that shifted the critical blood oxygen processing function from the Watch to the iPhone, allowing the feature to return to market after Customs approval in August 2024. This maneuver highlights Apple's technical flexibility and urgency in protecting its market position. Yet the conflict isn't resolved; Masimo continues aggressive legal challenges, including a separate California jury trial seeking up to $749 million in damages, while the U.S. International Trade Commission (ITC) reopened proceedings in November 2024 to assess the redesigned Watch's patent compliance, targeting a decision by May 2025. Apple's history of navigating complex patent disputes, evidenced by a $250 million victory in a separate Delaware design case in 2024, suggests a pattern of resilience despite costly setbacks.

The outcome of these ongoing proceedings remains a critical uncertainty for the future trajectory of Apple's wearables business, a segment crucial to its long-term growth strategy and premium pricing power.

Apple faces significant near-term pressure from escalating legal battles surrounding its wearables portfolio, yet the core growth thesis for the company remains fundamentally intact. Recent developments include a federal jury imposing a $634 million penalty on Apple for patent infringement and the U.S. International Trade Commission (ITC) reopening proceedings to assess whether Apple's redesigned Apple Watch still infringes Masimo's blood-oxygen sensing patents. This review, aiming for a decision by May 2025, revives the specter of potential import restrictions on current models after Apple had cautiously reintroduced the contested feature in August 2024. These legal challenges, including a separate trade-secret case mistrial and a countersuit victory where Apple was awarded $250 million in Delaware, inject substantial uncertainty and a heightened risk premium into the stock. While the outcome directly impacts near-term profitability and market sentiment, particularly regarding the health tech leadership embodied by the Apple Watch, a focus on penetration rates and continuous cost/performance improvements in wearables suggests the underlying demand for Apple's integrated ecosystem remains strong. Investors must weigh this legal risk against the company's demonstrated ability to navigate complex regulatory environments and its commanding position in high-growth segments like wearables, where margin expansion opportunities persist despite the patent challenges.

Apple's latest legal battles over blood oxygen technology represent more than a patent dispute-they're a critical test of its health tech strategy and growth trajectory. The core conflict stems from Masimo's allegation that Apple's redesigned Apple Watch still infringes its patents, despite prior compliance adjustments. This has triggered a six-month US International Trade Commission (USITC) review that could impose new import bans or mandate further feature restrictions on Apple's top-selling wearables.

Separately, a federal jury has already imposed a $634 million penalty on Apple for patent infringement related to the blood oxygen feature, a verdict Apple is actively appealing. This financial hit compounds the pressure from a previous U.S. import ban on Apple Watch models featuring blood oxygen monitoring, which was reinstated in early 2024 after an initial December 2023 suspension.

Apple's immediate countermove has been a 2025 technical workaround, shifting blood oxygen data processing from the watch to the iPhone to circumvent the patent claims. However, Masimo continues aggressive legal challenges aiming to block sales entirely, disputing the validity of the expired 2022 patent at the heart of the latest ruling.

This escalating legal warfare creates significant near-term uncertainty for Apple's wearables division, a key growth engine. Yet, it also underscores the intense value and competitive stakes in the health tech segment it's pioneering. Apple's ability to navigate this legal thicket-whether through successful appeals, patent negotiation, or further engineering workarounds-will directly impact its market leadership and upside potential in the burgeoning wellness tech ecosystem. Investors must weigh the immediate legal and reputational friction against the long-term opportunity of dominating this high-growth space.