Throughout its storied history, Apple has been no stranger to litigation. While many articles about the Cupertino, California-based tech giant’s legal woes are currently being published given the antitrust lawsuit that the Department of Justice filed over Apple’s alleged monopolization of the smartphone market, this story focuses on its legal wrangling with a smaller rival in the medical device space.
The Apple Watch, which first hit consumer shelves in 2015, is currently one of Apple’s best-selling products. The company sold nearly 50 million in 2022. The wrist-worn device has an array of heart monitoring features, such as electrocardiogram (ECG) functionality and irregular heart rhythm detection, enabling users to conveniently track their heart health. Despite its smashing commercial success, the Apple Watch has faced years of legal challenges.
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Priya Abani — CEO of AliveCor, a company that currently has several lawsuits pending against Apple — thinks that the tech juggernaut has made a habit of taking intellectual property from smaller medical device firms in order to improve the functionalities of the Apple Watch. She also believes that Apple has avoided being held accountable because it “bombards” smaller companies with litigation it knows they won’t be able to afford.
In an unattributable statement emailed to MedCity News, Apple denied all charges that it uses aggressive litigation tactics to intimidate smaller companies making patent infringement claims against it. The tech company also said that it values innovation and respects intellectual property.
Meanwhile, Abani said AliveCor plans to stand its ground and continue to fight back against Apple any way that it can — with hopes that it can be the David that finally beats Goliath.
Litigation history
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Founded in 2011 and based in Silicon Valley, AliveCor is a medical device company that sells remote and connected cardiac care services. Its founder — David Albert, who currently serves as the company’s chief medical officer — has been a pioneering figure in the field of mobile health technology for decades. He created AliveCor because he recognized the potential of utilizing smartphone technology to create portable, accessible electrocardiogram (ECG) devices.
In 2016, the company launched its KardiaBand product, which is an FDA-cleared wearable wristband that integrates with the Apple Watch to provide continuous heart rate monitoring and ECG readings to detect atrial fibrillation. Two years later, Apple launched its own software and hardware to provide immediate ECG readings to Apple Watch users.
AliveCor discontinued the KardiaBand product in 2019 — this was announced about eight months after Apple launched its own ECG functionalities, according to news reports. Apple’s new native ECG capabilities had apparently made AliveCor’s product unnecessary.
That led to AliveCor suing Apple in December 2020. AliveCor filed its case in the U.S. District Court for the Western District of Texas, claiming that Apple had infringed on three of its patents — all of which focus on monitoring cardiac arrhythmia. These patents covered AliveCor’s technology and methods for detecting and analyzing heart rhythms using portable devices. AliveCor charges that the Apple Watch utilized similar technology for monitoring heart rhythms without proper authorization or licensing from AliveCor, thereby infringing on its intellectual property rights.
In April 2021, AliveCor ratcheted up the legal battle by filing another complaint against Apple with the International Trade Commission over the same three alleged patent infringements. This time, AliveCor sought to ban the import of the Apple Watch in the U.S. This would basically prevent Apple Watches from being sold in the U.S., as they are assembled overseas.
The ITC launched an investigation in May 2021. That same month, AliveCor filed an antitrust lawsuit against Apple in California federal court, which accused Apple of monopolistic behavior. The complaint alleged that Apple had violated the Sherman Antitrust Law and California’s unfair competition law by way of its decision to bar third-party vendors from providing heart rate monitoring apps for the Apple Watch.
In June 2022, the ITC issued an initial determination in favor of AliveCor.
But then in December 2022, the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) invalidated AliveCor’s patents at the request of Apple. The PTAB ruling said that AliveCor’s patents were unpatentable because they were too obvious considering the state of cardiac research and technology advancements.
AliveCor is battling the PTAB ruling — in a recent interview, Abani described these patent invalidations as Apple’s “desperate last-ditch effort” to “bully” her company out of pushing forward with its patent infringement lawsuits. Apple denied this characterization.
When it came time for the ITC’s final determination, which was also in December 2022, the agency sided with AliveCor. In this decision, the ITC declared that imports for all Apple Watches with ECG technology should be banned — but that it would not enforce such a ban until an appeal tied to the PTAB dispute was resolved. The case is currently on appeal.
“The ITC order and the PTAB case are now being decided at the federal circuit courts, so we’re looking at a summer timeframe in which more things will happen,” Abani said.
As for the antitrust case AliveCor filed against Apple, it was dismissed by a federal judge in February of this year. The reasoning for the dismissal is being kept under seal temporarily. Abani said her company plans to appeal the dismissal, remarking that she is “deeply disappointed and strongly disagree[s] with the court’s decision.”
“Standard playbook”
In Abani’s view, it is Apple’s “standard playbook” to intimidate smaller companies until they back out of fighting for their intellectual property.
“Apple’s vast resources allow them to squash small innovators,” she said. “They have more lobbyists and lawyers on their payroll than we have employees.”
Her medical device company is far from the only one that has fallen victim to Apple’s aggressive refusal to settle lawsuits and penchant for dragging out legal battles, Abani added.
For instance, pulse oximetry company Masimo also sued Apple in 2020 on the basis of patent infringement. In the lawsuit, the medical devicemaker accused Apple of poaching its staff in order to steal trade secrets. Masimo also accused Apple of infringing on 10 of its patents, including technology to track users’ heart rates and blood oxygen levels.
In December, the ITC banned the Series 9 and Ultra 2 models of the Apple Watch. This was the result of an ITC ruling that said Apple’s blood oxygen sensors did in fact infringe upon patents owned by Masimo and its subsidiary Cercacor Laboratories. The ITC paused this ban the next day, allowing the watches to be sold temporarily. But then in January of this year, the court reinstated the ban.
In response to the ban, Apple redesigned the Series 9 and Ultra 2 versions of its watches so they would no longer have blood oxygen monitoring features. These redesigned versions of the Apple Watch are currently being sold in the U.S. Neither Masimo nor its lawyers responded to requests for comment on the litigation.
A lawyer engaged in another patent infringement lawsuit against Apple also believes that Apple goes after the little guy.
Andrew Bochner, managing partner at Bochner PLLC, currently represents NYU Langone cardiologist Joseph Wiesel in a federal court case accusing Apple of using his patented atrial fibrillation monitoring tool in its Apple Watch without permission.
“Apple has fought back with various patent proceedings. They filed an inter partes review, and they lost that. Then they filed an ex parte re-exam, which is now working its way through the system. So they’ve done everything they can to avoid defensively litigating and have tried to go on the offensive against an individual doctor,” Bochner declared of the lawsuit between his client and Apple.
He asserted that the tech giant “just fights back against who challenges them without ever being accountable.” He also said that Apple is known among the legal community to have a certain modus operandi: they do “not entertain any sort of real settlement discussions” and instead battle “tooth and nail” in order to wear out their rivals with fewer resources.
During the case’s post-grant proceeding in the U.S. Patent and Trademark Office, Apple said that it filed “roughly 10%” of the office’s total post grant proceedings, Bochner noted. A post-grant proceeding refers to the legal process conducted after a patent has been granted, often involving challenges to the patent’s validity or enforceability. These proceedings often arise due to challenges mounted by third parties or competitors who assert that a patent is invalid, either because it is overly broad or not novel.
“They’re using the courts as a tool because they know it’s expensive — for companies large and small — to litigate,” he remarked.
Stealing IP can “actually be cheaper”
Another medical IP lawyer — Bethany Corbin, who currently serves as CEO of women’s health innovation platform FemInnovation — agreed that it’s not uncommon for large companies to take advantage of smaller opponents that don’t necessarily have the means to go through an expensive legal process.
She looked at this issue from the perspective of a larger company infringing on the patents of a smaller one. If a smaller company takes its patent infringement grievance to court and wins, this could cause a large tech company to have to pay millions of dollars. But millions of dollars “is a small drop in the bucket” for tech giants, Corbin pointed out. Apple garnered $383 billion in total revenue last year and more than $173 billion in profits.
“In some instances, it can actually be cheaper for a large tech company to steal the IP from smaller tech companies than to try to enter into a legal licensing arrangement,” Corbin said.
Big tech companies may try to “game” the patent system and challenge smaller firms’ patents in two different venues — the courts and the PTAB. When the PTAB was established in 2012, it gave big companies a whole new way to fight patent infringement litigation, Corbin explained.
Huge companies like Google, Apple and Samsung were responsible “for over 80%” of PTAB petitions in 2021, she added.
“The small tech company sues the larger tech company in court. The large tech company then petitions the PTAB to strike down the patents that the large tech company is accused of infringing. This leads to parallel litigation with double the cost for small tech companies that have very limited budgets,” Corbin stated.
The litigation fees alone could sink a small startup, she declared. She said the fees typically total hundreds of thousands of dollars, particularly as litigation drags on for years and through the appellate process.
In Corbin’s view, if a large tech company draws out litigation and refuses to settle, it is “essentially waiting for the smaller tech company to run out of money and fold.”
But in the case of AliveCor, Apple may have misjudged the startup’s tenacity. Abani said that her company’s claims “go well beyond AliveCor,” representing every small company and future innovation that is “at risk of being squashed by Goliaths like Apple.”
In Abani’s eyes, the fight against Apple is paramount to preserving fair competition in the medical device space.
“Defending our rights is expensive, but the alternative is to give in to those who would continue to copy, monopolize and otherwise suppress the progression of life-saving technologies,” Abani wrote Thursday in an emailed statement. “We are fortunate to be in a position to go toe-to-toe with Apple, for the benefit of our customers and other similarly impacted companies, while still running a successful business.”
On the appeal for its antitrust case against Apple, AliveCor will need to argue that the distinct court erred in dismissing the lawsuit. If the appellate court agrees with AliveCor, then the case will go back to the district court and progress into the next stages — discovery, summary judgment motions and eventually a trial.
After all of that occurs, the losing party can still appeal the judgment up to the appellate court and Supreme Court.
“This entire process can take several years, so the dismissal of the case is definitely not the end of the story. In some ways, it’s actually just the beginning,” Corbin remarked.
AliveCor did not disclose its appeals strategy, but Abani said her company will do whatever it takes to stand up for itself.
“We are committed to protecting our IP and ability to compete fairly in the marketplace, to ensure that consumers always have the option to choose the best products and services,” she declared.
Photo: AndreyPopov, Getty Images
