Apple to halt sales of its newest watches in US over patent dispute

By MICHAEL LIEDTKE
AP Technology Writer

If two of the latest Apple Watches are on your holiday shopping list, don’t dawdle for much longer because the devices won’t be available to buy in the U.S. later this week if the White House doesn’t intervene in an international patent dispute.

Apple plans to suspend sales of the Series 9 and Ultra 2 versions of its popular watch for online U.S. customers beginning Thursday afternoon and in its stores on Sunday. The move stems from an October decision by the International Trade Commission restricting Apple’s watches with the Blood Oxygen measurement feature as part of an intellectual property dispute with medical technology company Masimo.

The White House had 60 days to review the ITC order issued on Oct. 26, meaning Apple could have kept selling the two affected models in the U.S. through Christmas. But the Cupertino, California, company said in a Monday statement that it is pausing sales early to ensure it complies with the ITC order.

White House press secretary Karine Jean-Pierre said the Biden administration was tracking the Apple Watch trade case. She said U.S. Trade Representative Katherine Tai has the authority to decide on the matter and that she was “carefully considering all of the factors in this case.” Jean-Pierre said she didn’t want to get ahead of any decision Tai might make.

The disruption will likely cost Apple about $300-400 million in holiday-season sales, estimated Wedbush Securities analyst Dan Ives. That’s a relative drop in the bucket for Apple, given analysts are expecting Apple to generate nearly $120 billion in sales during the October-December period that includes the holiday shopping season.

The sales suspension on the two Apple Watch models “doesn’t move the needle much for the company, but still it couldn’t have come at a worse possible time,” Ives said.

Apple’s stock so far hasn’t been significantly affected by the announced sales suspension on the two watch models, leaving the shares near their record high reached last week.

If the ITC’s sales ban isn’t overturned, Apple pledged to “take all measures” to resume sales of the Series 9 and Ultra 2 models in the U.S. as soon as possible.

The Apple Watch SE, which lacks the Blood Oxygen feature, will remain on sale in the U.S. after Christmas Eve. Previously purchased Apple Watches equipped with the Blood Oxygen aren’t affected by the ITC order.

This isn’t the first patent roadblock the Apple Watch has run into as it increasingly morphs into a health-management device. Last year, the ITC ruled that Apple had infringed on the wearable EKG technology of AliveCor — a decision the Biden administration declined to overturn. That dispute hasn’t directly affected Apple Watch sales yet because another regulatory body had ruled that AliveCor’s technology isn’t patentable. The legal tussle on that issue is still ongoing.

The patent headaches facing Apple as it tries to infuse more medical technology into its watch models makes it increasingly likely the company will either have to start working out licensing deals or simply acquiring startups specializing in the field, Ives predicted.