The Apple Watch maker has been fighting a good fight against the ban that officially took effect on December 25 before being temporarily paused so that the US Court of Appeals for the Federal Circuit could hear both sides of the case before deciding whether a full stay should be granted until Apple’s final appeal on the matter has been decided upon.

The ban was ordered by the US International Trade Commission (ITC) in October after the blood oxygen sensing technology found in most Apple Watch models was found to infringe on two patents owned by Massimo, a California-based health technology company that sells its own lineup of smartwatches. The ITC issued a limited exclusion order (LEO) and a cease and desist order (CDO) to block the import and sale of all infringing Apple Watch models following a standard 60-day Presidential review period.

That period ended on December 25, and after the White House declined to intervene, the Apple Watch Series 9 and Apple Watch Ultra 2 were removed entirely from sale in the US. However, Apple began proactively pulling the Apple Watch from shelves a few days before Christmas — a move Masimo CEO Joe Kiani called out as a “stunt” intended to pressure the Biden administration into overturning the ban.

Masimo and Apple go back a long way; the smaller company has been working on light-based pulse oximetry technology since before the Apple Watch was announced, and a separate 2020 lawsuit accused Apple of stealing trade secrets and poaching senior engineering and scientific staff from Masimo.

The Ban Gets Upheld and Blood Oxygen Features Get Switched Off

As Bloomberg reports, the appellate court handed down its decision yesterday, siding with the ITC, which has vociferously opposed a stay on the ban, telling the court that since Apple has already been found guilty of infringement by the ITC, “its arguments amount to little more than an indisputably adjudicated infringer requesting permission to continue infringing the asserted patents.”

Apple’s full appeal of the ITC’s ruling has yet to be heard by the US Court of Appeals for the Federal Circuit, but that process could take a year or more. The motion that was decided upon this week was whether the infringing Apple Watch models should be allowed to remain on sale pending the outcome of the appeal.

The appellate court granted a temporary stay the day after Apple filed its appeal, resulting in the affected Apple Watch models returning to sale on December 27. However, that was granted only to provide the ITC time to submit a response in opposition, and there was never a guarantee that the stay would be extended.

Fortunately for Apple, it’s managed to find an ace up its sleeve. In the weeks leading up to the ban in December, Apple’s engineers reportedly began looking at software changes that would help them bypass the ban by removing the infringing technology. Such changes would have to pass muster from US Customers and Border Protection — the agency charged with enforcing the ban. Several patent experts considered it a long shot, and Masimo insisted that “the hardware needs to change” since the patents cover the physical sensors and not the software algorithms.

However, Apple’s “Hail Mary” paid off when US Customs approved the changes earlier this month, which seemingly amount to Apple disabling the blood oxygen feature entirely.

While the decision on a stay was still pending, Apple began shipping out these modified Apple Watches to stores, telling retail staff to hold them in reserve in case the ruling didn’t go in Apple’s favor.

Now that it hasn’t, Apple stores will be cracking open those boxes to sell those new versions that omit the blood oxygen features in the US. The company told Bloomberg that the “tweaked” models will go on sale today at Apple’s retail outlets and online store. However, since the ban doesn’t affect third-party retailers, they’ll still be able to sell off any existing inventory of unmodified Apple Watches.

To be clear, Apple has not made any hardware changes to the Apple Watch Series 9 or Apple Watch Ultra 2. Both included the blood oxygen sensing hardware, however it’s been rendered non-functional through a software update.

The good news is that what’s taken away by one software update can be put back by another. Should Apple prevail in its appeal, these “modified” Apple Watches would likely get a future software update to re-enable the blood oxygen sensing feature. However, we could be on watchOS 11 or watchOS 12 before that happens.

Pending the appeal, Apple is taking steps to comply with the ruling while ensuring customers have access to Apple Watch with limited disruption. Apple’s appeal is ongoing, and we believe the US Court of Appeals for the Federal Circuit should reverse the USITC’s decision. We strongly disagree with the USITC decision and resulting orders.Apple, in a statement to Bloomberg

What This Means For You

There’s a fair bit of nuance to this whole situation, so it’s important to clarify what the ITC’s ban means and what it doesn’t.

1. As a US agency, the ITC orders only apply to the Apple Watch in the United States. Nothing has changed in any other country where the Apple Watch is sold.
2. The Apple Watch SE is unaffected as it doesn’t contain a blood oxygen sensor.
3. There are two ITC orders involved:
   1. The limited exclusion order (LEO) prohibits Apple Watch models with blood oxygen sensors from being imported into the United States by anyone.
   2. The cease and desist order (CDO) prohibits Apple from selling those Apple Watch models in the United States.
4. The CDO is specific to Apple and does not affect third-party resellers. This means Amazon, Best Buy, Walmart, and others can continue selling the Apple Watch Series 9 and Apple Watch Ultra 2 as-is, including older models.
5. However, the CDO does prevent Apple retail employees from telling customers that the Apple Watch can be purchased elsewhere. If a customer asks, employees have been directed by Apple to respond by saying “Unfortunately, due to the ongoing legal matter, I am not able to provide you with any information about where you can buy Apple Watch Series 9 or Ultra 2.”
6. The LEO carves out an exception to allow Apple to conduct warranty repairs and replacements for any Apple Watch model, whether it has a blood oxygen sensor or not. Replacement service units and parts can be imported even with the ban in effect, as long as they’re not being imported to be sold. Out-of-warranty repairs will not be covered.
7. Both the LEO and CDO only affect the import and sale of new Apple Watch models. Anyone who has already purchased an Apple Watch with a blood oxygen sensor will be permitted to keep using it. The ban is about Apple profiting from patent infringement going forward; the ITC doesn’t care about the Apple Watch you’re already wearing, as that money was collected before the ruling was handed down.

The last point is critical. While it’s unclear how Apple is disabling the blood oxygen features, it’s doing so in such a way that it only affects new Apple Watch models — and only those in the US.

If there’s any doubt about that, Apple told Bloomberg that the feature won’t be touched on already-purchased Apple Watch models or those sold in other countries.

The company added that the feature remains available on models sold outside the US. Previously purchased watches also will retain the ability to check blood oxygen levels.Bloomberg

Regional differences in features aren’t anything new — the Apple Watch ECG was limited to the US at launch — but we’re not sure how Apple will differentiate between Apple Watch Series 9 and Ultra 2 models that are already on customers’ wrists and those that are now in boxes at Apple Stores. In the short term, it’s not too hard as those new models likely come with a modified version of watchOS 10 that’s not available as a regular software update.

Presumably, Apple has figured out some way to ensure that future watchOS updates don’t restore the feature to these “modified” Apple Watches or take it away from those that already have it. However, this does raise the interesting legal question as to what would happen if Apple adds the infringing feature back via a free software update to one of these approved Apple Watch models after it’s sold to a customer.