The booming smartwatch industry faced seismic upheaval Tuesday as a sweeping ban prohibits the import of certain Apple Watch models into the United States. Shares of market leader Apple plunged on news that its flagship wearable device violated a smaller rival’s health sensor patents.
Creator: – Jon Fingas Credit: – Flickr
Trade Commission Deals Rare Blow to Apple
In a bombshell judgment, the U.S. International Trade Commission sided with medical tech upstart AliveCor in its lengthy legal battle against the consumer tech monolith. Regulators ordered an immediate import cease on Apple Watches containing ECG technology judged to infringe on AliveCor’s intellectual property.
Specifically, Apple stands accused of copying AliveCor’s breakthrough system for detecting atrial fibrillation using only a smartwatch’s onboard sensors. Though older generations avoid the embargo, more recent Series 7 and Series 8 models rely heavily on now-banned features.
Rare Setback for Juggernaut
The rare defeat for Apple continues months of scrutiny over its alleged anticompetitive practices from app developers to music streamers. However, this judgment marks the first time Apple faces real legal consequences limiting its product suite.
Bullish Apple analysts downplayed the long-term fiscal impacts given the company’s roaring success across other segments like smartphones and services. But in the nearer term, losing health credentials central to marketing threatens the Apple Watch’s dominance against hungry rivals.
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Windfall for Rivals?
Alleged patent violator Apple must now weigh redesigning infringing technology or enduring lost sales as rivals seek openings. Industry flameouts like Fitbit or Garmin could soon be revitalized by rushing floodgates if the Apple Watch vanished from shelves later this year absent modifications.
Both companies saw their stock pop Tuesday afternoon on expectations of improved competitiveness. So, while Apple decries this “innovation-stifling” ruling, fellow wearables makers hope to capitalize on potential openings in a long stagnant market.
Legal experts expect plenty more courtroom sparring before any import ban gets implemented. But AliveCor CEO Priya Abani considers this initial judgment a warning that “true innovation won’t be trampled without consequence.” After nearly a decade chasing smartwatches, Apple finally stumbled – and the impacts may dramatically reshape the race.
