If Medical Data is the new oil, then Apple Computer’s “win” against Masimo Corporation, the largest supplier of smart medical wearable devices in the world and, thereby, a generator of an ocean (billions of gigabytes) of patient data, is significant.
Masimo, the Irvine-based maker of wearable patient monitoring devices, sued Apple Corporation, the world’s most valuable corporation—$2.8 trillion market value—in January 2020 accusing it of stealing its employees and intellectual property.
Masimo sells devices which non-invasively measure:
- carboxyhemoglobin,
- methemoglobin,
- hemoglobin concentration,
- fractional arterial oxygen saturation,
- blood oxygen content,
- pleth variability index,
- rainbow pleth variability index,
- respiration rate from the pleth,
- oxygen reserve index,
- acoustic respiration monitoring,
- SedLine brain function
- NomoLine capnography
- Gas
- O3 regional oximetry
- brain function
- hemodynamic
- patient position and
- activity tracking
….and do so in real time, using a patient worn sensor—a wearable.”
Apple’s Bare-Knuckle Tactics Against Masimo
In 2013, according to filings in the court case, Apple had decided to enter the medical device technology market but, lacking experience in the med device domain, was intrigued with Masimo, the leading supplier of wearable medical monitoring devices and sensing technologies.
Adrian Perica, Apple’s current vice president for corporate development, characterized Masimo’s CEO Joe Kiani as having a “Steve Jobs-like reputation” and thought that his company might be an attractive acquisition target or partner for Apple.
So, a corporate dating dance began.
Masimo’s team, led by Kiani, trooped up to Apple’s headquarters in Cupertino and met with Apple CEO Tim Cook in May 2013.
Adrian Perica and the Apple guys, then shlepped down to Irvine to meet Kiani and the team at Masimo’s Irvine offices.
Ultimately, Tim Cook chose not to pursue a Masimo acquisition.
But, Apple did decide to pursue certain key Masimo employees—specifically Dr. Michael O’Reilly, a physician, and Marcelo Lamego, a Masimo scientist and Stanford engineering Ph.D.
Dr. Lamego, as a newly minted Apple scientist and former Masimo employee, probably set a speed record for dreaming up intellectual property—filing 12 internal Apple patents in just two weeks—basically 1 per day. Six months later, Lamego left Apple. Dr. O’Reilly is still an Apple employee.
The U.S. Patent and Trademark Office issued patents to Apple which, in their lawsuit against Apple, Masimo alleges contained confidential science and engineering techniques which O’Reilly and Lamego learned while working at Masimo and with Masimo co-founder Mohamed Diab.
In January 2020, Masimo filed its lawsuit against Apple.
Masimo’s Track Record
When it comes to patent litigation, Masimo’s CEO Kiani tends to win.
A couple decades back, Masimo collected $750 million from Tyco International, a huge industrial conglomerate, for patent infringement.
Later, Masimo won a case against Apple at the International Trade Commission where the judge ruled that Apple Watch infringed one of the Masimo’s pulse oximetry patents.
Then, in 2022, Masimo won a case against True Wearables Inc.—ironically the very company that former Masimo and former Apple scientist Marcelo Lamego founded after he left Apple.
In that case, the judge banned Lamego from selling his infringing product.
Masimo v Apple – the Scope and the Outcome
Masimo’s lawsuit against Apple was heard in Orange County, at the U.S. District Court, Central District in Southern California before Judge James V. Selna.
Apple deployed nine attorneys from seven separate law offices against Masimo’s twelve attorneys from three separate law offices.
They weren’t there to make things easy for anyone.
The jury instructions alone ran 375 pages.
More than 1,500 documents were filed with the court.
Masimo (along with one of its affiliate companies, Ceracor) claimed:
- Apple improperly obtained, disclosed, and used alleged trade secret information through two of their former employees.
- Apple filed patents on inventions to which Masimo and Cercacor employees contributed, and
- those employees should be added as named inventors on those patents, and
- Masimo and Cercacor should be part owners of those Apple patents.
Apple denied all of Masimo’s claims and countered saying:
- The trade secrets that Masimo claims are trade secrets are not actually trade secrets,
- Apple did not misappropriate Masimo’s alleged trade secrets.
- Masimo’s employees should not be added as co-inventors to the disputed patents and
- Masimo is not a joint owner of Apple’s issued patents which are the subject of the lawsuit.
- Finally, Masimo is not entitled to obtain relief because they have unclean hands.
Apple’s “unclean” hands argument was an attempt to paint Masimo as being, in effect, unworthy of relief because of past behavior which would rise to the level of being fraudulent, deceitful, unconscionable or in bad faith.
Yes, the gloves were off.
And the Winner Is…
On Wednesday, April 26, 2023, Judge Selna sent the case to seven Orange County, California jurors. They deliberated through that afternoon and on into Thursday and Friday.
The jurors were charged with deciding whether Masimo was entitled to $1.8 billion in unjust enrichment related to six alleged trade secrets which Masimo said Apple misappropriated.
Early Friday afternoon, the jury sent Judge Selna a note saying that they’d voted on the six allegations of trade secret misappropriation and … “We are not being able to come to a joint conclusion. What do we do now? She will not change.”
Judge Selna asked the jury to continue deliberating through the end of the day, but just two hours later, the jury sent another note: “We will not be able to change anyone’s opinion. We are ready to stop the whole process with not being able to agree.”
Six of the jury members had voted for Apple, one for Masimo.
“I think you’ve done all that the court can reasonably expect you to do in this case,” Judge James V. Selna told the jury that same afternoon. “I appreciate your diligent efforts.”
For their part, Masimo intends to retry the case and continue to pursue legal redress against Apple.
In addition, the United States Trade Commission is scheduled in the coming months to decide whether to ban the importation of certain models of the Apple Watch, following a ruling … by an Administrative Law Judge … that Apple infringed one of Masimo’s patents for pulse oximetry.
Apple “thanked the jury for their careful consideration in this case” and denying wrongdoing regarding its Masimo hires. “We deeply respect intellectual property and innovation and do not take or use confidential information from other companies. We are pleased that the court correctly rejected half of the plaintiffs’ trade-secret allegations and will now ask the court to dismiss the remaining claims.”
As for the six jurors who sided with Apple, they said later that Masimo’s attorneys did not prove a connection between Masimo’s alleged trade secrets and the Apple Watch.
The one juror who sided with Masimo said that other jurors did not have a clear understanding of the exhibits and that she did not regret her decision.
