Lost In The Latest Apple Watch Patent Battle: The ITC Loophole Creates A Mess
If you follow tech news at all, you likely heard some stuff about the potential for an Apple Watch ban over patent infringement. It was all over the news. Apple had pulled its high end watches from its store last week, following an ITC ruling from earlier this year claiming that Apple's blood oxygen reading sensor in the watch violated the patents of a company by the name of Masimo. The patent claim here might even have some level of validity, given the history of how Apple ended up developing such tech.
Then, last week, there were claims that the Biden administration could step in and block the the enforcement of the ITC's ruling. But that always seemed unlikely (even if Obama did step in a decade ago to block a similar enforcement of an ITC ruling saying that Apple infringed on Samsung patents).
You also might have heard the news yesterday that Apple's watches were going back on sale following an appeals court stepping in to halt the import ban. Of course, many articles about this failed to mention which court stopped the ban, so we'll help you out on that one. It was the Court of Appeals for the Federal Circuit (CAFC) granting the stay of the ITC's order in a two page order while it reviews it.
If all of this sounds vaguely familiar, well, it should. Almost exactly a year ago, we wrote about something that sounded nearly identical. The ITC had said it was going to ban the import of Apple watches, after saying that Apple infringed on a patent from a different company, AliveCor, regarding heart rate tracking (as opposed to blood oxygen tracking). In that case, also, the Biden administration chose not to step in and veto the ITC. And, also, in that case, the ITC ban was put on hold while Apple and AliveCor continued to fight things out in court. (One major difference in the AliveCor story is that the Patent Trial and Appeal Board invalidated AliveCor's patents even before the ITC ruled, which made things... well... weird.)
But, really, what this should be doing is shining a bigger light on the silly ITC loophole through which both of these cases happened. We've been writing about the ITC loophole for over 15 years. It basically is a mechanism that gives patent holders two separate chances to file a lawsuit against a company for patent infringement, as the ITC process can happen in parallel with a case in federal court for patent infringement.
While the ITC is limited in the remedies it can issue (it can't order a company to pay up, it can only block the import of goods from abroad), it leads to these weird situations where the ITC can effectively route around the courts and issue a separate ban order (like these two in the past year or so regarding Apple Watches) regardless of what a court finds (or if the Patent Office admits it made a mistake in issuing the patent).
This whole process is a mess. There is an Article III court process for reviewing if someone infringed a patent or not. There's no need for another agency, one unrelated to patents, to have the authority to review the case separately. All it does is give patent holders an extra shot at trying to force another company to pay up.
In this case (as with the AliveCor situation), at least, it seems that the CAFC is stepping in to say hey, let's wait on the ITC bans until the entire court process has played out," but that just reinforces the idea that the ITC process is confusing and duplicative.
Let the courts go through their process, including appeals, and if by the end of that process it's determined that one company infringed on another's patents, and then is unable to negotiate a license, then open up the ITC process to put in place an import ban. At that point, it's been thoroughly adjudicated in courts of law, rather than through the administrative ITC process, and avoids situations like this where an import ban threatens to block an entire product before it's been fully adjudicated in court.