Masimo Corporation and Cercacor Laboratories, Inc. filed a complaint with the United States International Trade Commission (ITC) alleging that Apple Inc. violated Section 337 of the Tariff Act by importing and selling Apple Watch models that infringed Masimo's patents covering wearable blood oxygen measurement technology. The ITC instituted an investigation, and an administrative law judge (ALJ) found that Masimo had established the existence of a domestic industry, that the Apple Watch infringed specific claims of Masimo's patents, and that those patents were valid. The Commission issued a Limited Exclusion Order (LEO) barring the importation of the infringing Apple Watches. Apple appealed, challenging the Commission's findings on the domestic industry requirement, the validity of the patents, and the infringement determination.
The Federal Circuit addressed three primary issues. First, regarding the domestic industry requirement, the court rejected Apple's argument that the technical prong requires a single, exact physical article identified in the complaint. The court held that the Tariff Act and Administrative Procedure Act allow complainants to rely on circumstantial evidence and iterative prototypes to prove the existence of a domestic industry article. The court found substantial evidence that Masimo's 'Masimo Watch' prototypes, developed through an iterative design process, practiced the asserted claims at the time of the complaint. Second, on the economic prong, the court affirmed that investments in precursor prototypes that did not practice the patent claims could be counted if they were specifically tailored to the development of the patent-practicing article. The court found that investments in the 'Circle' and 'Wings' sensors were directed to significant components of the final 'Masimo Watch' and thus satisfied the economic prong. Third, the court reviewed the infringement and validity findings de novo. It affirmed the ALJ's claim construction of 'over' and 'above' as relative positions rather than vertical orientations, noting that Apple's construction would exclude disclosed embodiments. The court also upheld the Commission's finding that the patents were not invalid for lack of written description or obviousness, finding substantial evidence that the specification disclosed the claimed combinations and that the prior art did not teach measuring blood oxygen saturation.
The decision affirms the ITC's Limited Exclusion Order, preventing Apple from importing the infringing Apple Watch models into the United States. It clarifies that Section 337 complainants can use circumstantial evidence and iterative prototypes to prove the domestic industry requirement, lowering the evidentiary burden for establishing the existence of a domestic industry in complex technology cases. The ruling also solidifies the interpretation of claim terms like 'over' and 'above' in wearable medical devices, ensuring that claim constructions align with the specification's disclosed embodiments.
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