U.S. Import Ban Hits Apple Watch: Samsung Eyes Smartwatch Market

President Biden has no veto power
Apple is anticipated to extend the dispute further during the appeal process

The U.S. government has upheld the International Trade Commission’s (ITC) import ban on Apple Watches due to patent infringement. Apple has promptly filed an appeal with the Federal Circuit Court, but the final verdict is anticipated to require some time. This unexpected development presents a golden opportunity for Samsung Electronics, a runner-up in the smartwatch market.

In a recent announcement, the United States Trade Representative (USTR) has officially confirmed that, following extensive consultations, Representative Katherine Tai has chosen not to reverse the International Trade Commission’s (ITC) ruling. Consequently, the ITC’s decision to impose an import ban has reached its final stage and will remain unchanged. This decision by the ITC in October found Apple violating a patent held by the medical device company Masimo regarding blood oxygen measurement, resulting in a ban on importing these Apple products into the United States. As a result, sales of Apple Watches from countries outside the U.S., notably China, have encountered restrictions.

Apple was granted a 60-day grace period, during which it had hoped for President Joe Biden to consider employing his veto authority. This optimism stemmed from a previous instance in 2013 when then-President Obama overturned an ITC ruling that had found the iPhone 4 and iPad 2 in violation of patents held by Samsung Electronics. However, the dynamics of the current dispute, with Masimo being a U.S.-based company, introduced complexity to the situation. Consequently, Apple seemed to relinquish its expectations of a presidential veto and halted online sales of its latest Apple Watch model just before the Christmas holidays.

The affected Apple Watches encompass a range of models, including the latest Apple Watch Series 9, Apple Watch Ultra 2, and all iterations since the Apple Watch 6 that feature a blood oxygen measurement sensor. For these specific models, it’s worth noting that hardware repairs are no longer a viable option once the warranty period has elapsed. This is primarily due to Apple’s practice of replacing the entire product rather than repairing individual components in the event of hardware failures.

In response to the USTR decision, Apple has taken prompt action by filing an appeal with the Federal Circuit Court and simultaneously applying for a stay of execution. The court is slated to determine the stay of execution on January 12 of the upcoming year. Apple has opposed the import ban decision, emphatically stating its disagreement and underscoring its dedication to pursuing every possible option to ensure the continued availability of the Apple Watch for consumers.

However, many speculate that the chances of the stay of execution being granted remain low due to the ITC’s firm stance on the issue. The fact that Apple is not negotiating with Masimo is also worsening public opinion. Masimo has revealed that Apple approached them initially for technology cooperation and investment, took away their technology and personnel, and showed no willingness to negotiate during the patent lawsuit. Masimo is optimistic about reaching an agreement with Apple.

Samsung Electronics, a perennial second in the smartwatch market, has unexpectedly gained an opportunity at the end of the year. Market research firm TrendForce forecasts that the global smartwatch shipment in 2023 will reach 130 million units, with Apple and Samsung Electronics projected to hold market shares of 32% and 10%, respectively. Samsung Electronics is trying to narrow the market share gap with aggressive marketing, such as offering up to $80 discounts on the Galaxy Watch 6 series in North America.

By. Min Hyuk Yoon