Masimo Corp. (Nasdaq: MASI) is about to get a special gift, the day after Christmas.
That’s when the U.S. government is expected to start banning imports of watches made by Apple Inc., the world’s most valuable publicly traded company (Nasdaq: AAPL), with Masimo’s technology for pulse oximetry.
“We’re happy with it,” Masimo Chief Executive Joe Kiani told the Business Journal.
“We’ve been at this two and a half years. We’re looking forward to having patents mean what they mean.”
The U.S. International Trade Commission on Oct. 26 found Apple violated patent laws by incorporating Masimo’s light-based pulse oximetry technology in its products. The exclusion is scheduled to go into effect after a 60-day presidential review period; as of press time, no announcement had been made by the Biden administration.
Kiani, who has been a longtime political supporter of President Joe Biden, said he hasn’t been contacted by the White House.
It’s the latest big legal win for Masimo, which has won several big cases in the past two decades, collecting hundreds of millions of dollars in settlements from giant medtech companies Royal Philips Electronics NV and Nellcor, now a unit of Medtronic PLC.
Apple reported its wearables division, which includes its watches, generated $41.2 billion in 2022, or about 10% of its total revenue. Analysts are expecting Apple to sell about 59 million watches this year.
It’s not yet clear whether Apple will remove the application in question from its watches, or shift to imports of a watch that doesn’t have the offending technology.
Kiani declined to say if Masimo is negotiating with Apple.
Since the ITC announcement, Masimo shares have climbed about 39% to $112.30 each and a $5.9 billion market cap.
Apple shares have climbed about 19% during the same period; it now has a $3.1 trillion market cap.
Apple shares have also climbed about 16% during the same period; it now has a $3 trillion market cap.
2nd Win
If the ban goes into effect, it would be the Masimo watch’s second big win from the U.S. government in a little over a month.
On Nov. 17, Masimo announced that its W1 medical watch received Food and Drug Administration clearance for over-the-counter and prescription use, allowing the company to market its product to hospitals and clinics as a way to monitor patients who are sent home after operations.
Masimo likes to say it’s a medical device maker using hospital level technology in consumer devices, while rivals are tech companies trying to enter this field with medical data that can be flawed.
“There’s so much noise out there and people acting like they have something that has medical value,” Kiani said. “This is the first product to be cleared by the FDA. It will help consumers get to the facts and not get caught up in all the fiction.
“Apple recognized that its product wasn’t good enough to seek FDA approval,” Kiani said.
The W1 is based on Masimo pulse oximetry technology, which was first introduced in 1995. Masimo said it’s been shown to outperform other pulse oximetry technologies in over 100 independent and objective studies.
Masimo estimated its SET system is used on more than 200 million patients in healthcare settings around the world.
Clinicians at several institutions in Europe and the Middle East are already using Masimo W1 in a variety of innovative ways, Kiani said. For example, England’s Cambridge University Hospitals is using the watch to expand program to support patients after being discharged.
Anesthesiologiest in Switzerland are using the W1 to better understand patients before surgery.
The watch is part of a strategic shift by Masimo to use its hospital-grade technology in consumer devices like headphones and baby monitoring devices. The shift could expand the company’s total addressable market from $9 billion to $171 billion.
