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Apple to Halt US Sales of Series 9, Ultra 2 Smartwatches Over Patent Dispute

Apple (AAPL.O) said on Monday it would pause sales of its Series 9 and Ultra 2 smartwatches in the United States from this week, as it deals with a patent dispute over the technology that enables the blood oxygen feature on the devices.

The move comes after an order in October from the U.S. International Trade Commission (ITC) that could bar Apple from importing its Apple Watches after finding the devices violate medical technology company Masimo’s (MASI.O) patent rights.

The decision is under review by President Joe Biden until Dec. 25, but Apple said it is taking steps to comply should the ruling stand. The Office of the U.S. Trade Representative, the part of the Biden administration handling the case, said that Ambassador Katherine Tai “is carefully considering all factors in this case.”

If not vetoed, the ban would go into effect on Dec. 26.

The company said it would pause sales of the watches from its website starting on Dec. 21 and from Apple retail locations after Dec. 24. Other models that do not contain the blood oxygen sensor, like Apple’s lower-priced Apple Watch SE model, are unaffected by the dispute.

Ryan Reith, program vice president for research firm IDC’s mobile device tracking efforts, said that U.S. holiday sales of Apple Watches will not suffer and that the full impact of the ruling, if it stands, will come in January and February, typically some of Apple’s slowest sales months in the U.S.

“Apple has plenty of inventory of Watch 8 and SE so they will have products available during that time,” Reith said. “The bigger implication is around whether or not Apple can use the blood oxygen sensor technology that is in question on future devices, or if they’ll have to reach a settlement or come up with a new solution.”

Masimo CEO Joe Kiani told CNBC in October that he was open to negotiating a deal with Apple. In a statement on Monday, Masimo said the ITC decision “should be respected, protecting intellectual property rights and maintaining public trust in the United States’ patent system and encouraging US industry.”

Apple has about a quarter of the global smartwatch market, according to Counterpoint Research – a share that tends to rise to more than a third in the fourth quarter during the U.S. and European holiday sales seasons. Both the Series 9 and the Ultra 2 would remain available for purchase outside of the United States, including during the Lunar New Year season in Asia.

Apple said it believes the ITC’s finding was erroneous, should be reversed and that it intends to appeal the decision to the Federal Circuit.

Source : Reuters