Apple watch ban stands after White House fails to offer reprieve
The White House refused to overturn a sales ban on Apple Inc.'s smartwatches in the US, prompting the tech giant to seek relief in federal court.
The US International Trade Commission determined in October that Apple violated two Masimo Corp. health-technology patents with a blood-oxygen sensor in its watches. The White House had 60 days to review the import ban, with the decision resting with US Trade Representative Katherine Tai.
"After careful consultations, Ambassador Tai decided not to reverse the ITC's determination and the ITC's decision became final on December 26, 2023," the Office of the US Trade Representative said Tuesday in a statement.
Apple announced hours after the trade office's decision that it is challenging the ITC ruling at the US Court of Appeals for the Federal Circuit. The company on Tuesday also filed an emergency motion seeking to lift the ban on watch sales while the court considers its appeal.
"We strongly disagree with the USITC decision and resulting exclusion order, and are taking all measures to return Apple Watch Series 9 and Apple Watch Ultra 2 to customers in the US as soon as possible," an Apple spokeswoman said.
Apple had stopped selling its Series 9 and Ultra 2 watches in its online store and US retail outlets ahead of the review's Tuesday deadline.
The ban threatens a business that generated about $17 billion in revenue in the last fiscal year, according to analyst estimates.
Apple shares were largely unchanged at the start of trading on Tuesday morning in New York, down slightly from their previous close of $193.60.
Apple, based in Cupertino, California, added the blood-oxygen sensor to its watches in 2020. Masimo argued it invented the technology - and that the iPhone maker had poached its employees. The ITC sided with Masimo, an Irvine, California-based medical device maker.
Health features have become a key selling point for the Apple Watch, vaulting the company into competition with medical device makers.
The Series 9 and Ultra 2 models account for most of Apple's watch sales. The company doesn't disclose how much revenue the product line brings in, but it's a core part of its Wearables, Home and Accessories business, which generates sales of more than $40 billion a year.
The Biden administration placed little public emphasis on the dispute ahead of Tuesday's statement, but has dedicated considerable attention to antitrust efforts, with President Joe Biden saying regularly that competition is a pillar of healthy economies.
The US president has authority to intervene and stop import bans, though such actions are rare.
A prolonged ban would hit one of Apple's biggest moneymakers at a difficult time. Already, the company has been struggling to pull out of a sales slump. Heading into the holiday season, Apple revenue had dropped for four straight quarters, the longest such streak in two decades.