Last month, the Federal Circuit issued its opinion in Apple Inc. v. International Trade Commission, a patent case we have been following because it attracted an amicus brief. In this case, Apple appealed from a limited exclusion order issued by the International Trade Commission barring the importation of Apple Watches found to infringe patents owned by Masimo Corporation and Cercacor Laboratories, Inc. In an opinion authored by Judge Stark and joined by Judges Lourie and Reyna, the Federal Circuit affirmed the judgment of the International Trade Commission. This is our summary of the opinion.
Judge Stark began by outlining the factual and procedural background:
In 1995, Masimo introduced its motion- and low-perfusion-tolerant Signal Extraction Technology (‘Masimo SET’), which substantially reduced false alarms caused by certain conditions prevalent in clinical settings, such as patient movement or poor circulation. Masimo has obtained multiple patents for the Masimo SET technology and is the assignee of . . . the ’502 patent[] and . . . the ’648 patent[] [(collectively, ‘Poeze Patents’)] . . . . Generally, the Poeze Patents cover wearable technology that measures user physiological metrics by way of optical emitters and photodetection. These devices use light-emitting diodes (‘LEDs’) to emit light at specific wavelengths into tissue at a measurement site, such as the fingertip. Photodetectors on the device then measure the returned intensity of these optical emissions, which is attenuated by the wearer’s tissue and blood. The level of attenuation is then used to determine the desired physiological parameter of the device wearer. On September 24, 2020, Masimo filed with the U.S. Patent and Trademark Office the applications that later became the Poeze Patents. Their claims share substantially similar limitations, including that the covered devices must be ‘user-worn’ and utilize transmissive windows that extend across or exist within a convex protrusion of the device. . . . Apple released the accused version of the Apple Watch on September 15, 2020. It contained a feature Apple called the ‘Blood Oxygen sensor,’ which ’employs LEDs, along with photodiodes’ to measure the wearer’s ‘blood oxygen levels.’ . . . On June 30, 2021, Masimo filed its complaint against Apple with the Commission, which it amended on July 7, 2021. Masimo’s amended complaint alleged that the Apple Watch infringed various claims of several Masimo patents, including the Poeze Patents, and sought an exclusion order pursuant to § 337 of the Tariff Act prohibiting Apple from importing the Apple Watch. . . . The Commission instituted an investigation to determine whether Masimo was entitled to such relief. In June 2022, an administrative law judge (‘ALJ’) held a fiveday hearing . . . . Ultimately, the ALJ held that Apple violated § 337 because the Apple Watch infringed claims 24 and 30 of the ’648 patent, claims practiced by Masimo that Apple failed to prove were invalid. Apple and Masimo then cross-petitioned for Commission review of the ALJ’s ruling, and the Commission granted such review in part. On October 26, 2023, the Commission issued its final determination . . . . [T]he Commission’s overall finding was that Apple violated § 337 with respect to four claims that had not been shown to be invalid: claims 12, 24, and 30 of the ’648 patent and claim 28 of the ’502 patent.1 As relief, the Commission issued a LEO barring importation of the infringing Apple Watches. Apple timely appealed.
After reciting the standard of review, Judge Stark turned to Apple’s first principal argument, that “the Commission erroneously concluded that Masimo demonstrated a domestic industry as is required to establish a violation of § 337.” Judge Stark explained that “the Tariff Act’s domestic industry requirement . . . consists of two prongs: the economic prong, which requires that there be an industry in the United States relating to the patent, and the technical prong, which requires that the industry relate to articles protected by the patent.”
Judge Stark began with the technical prong. First, he addressed Apple’s argument that “the Commission must find the technical prong satisfied only by the exact article identified in the complaint.” He rejected that contention, emphasizing that “[t]he law is not so rigid” and that “[n]either the Tariff Act nor the APA supports Apple’s contention.” As he explained, “[p]ursuant to the APA, the Commission has promulgated regulations governing what a § 337 complaint must contain. . . . . [and] [t]his regulation does not require a complainant to identify, in its complaint, the exact physical article upon which it may ultimately rely throughout a § 337 investigation.” Instead, he noted, “[i]t is sufficient for the complaint to identify ‘a representative’ article.'” Judge Stark concluded that Masimo’s complaint satisfied that requirement because it clearly identified “the Masimo Watch [as the] domestic industry article, and . . . include[d] computer aided design (‘CAD’) drawings, among other visual depictions, of representative embodiments of that article.”
Judge Starked next turned to Apple’s argument that “the Commission was required to confine its technical prong analysis to the specific RevA, RevD, and RevE models Masimo produced during discovery.” He rejected that argument as well, noting that “[n]othing in the Tariff Act, the APA, or the Commission’s rules supports Apple’s contention that the technical prong analysis must be confined to only those individual devices a complainant physically produces in discovery, as opposed to treating such devices as representative embodiments of the broader domestic industry article they are found to reflect.”
Judge Stark then addressed Apple’s contention that “a complainant may not rely on circumstantial evidence to meet its burden to prove that a patent-practicing article existed at the time it filed its complaint.” Again, Judge Stark disagreed. He pointed out that “the APA broadly sets out that ‘[a]ny oral or documentary evidence may be received’ during an agency adjudication, and ‘[a] party is entitled to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required.'” He said “[n]othing about this authorization restricts an agency’s consideration solely to direct evidence.” Accordingly, he concluded, the court “discern[ed] no error in the Commission’s reliance on the Masimo Watch as the patent-practicing article for purposes of the technical prong.”
Judge Stark next addressed Apple’s argument that “prototypes do not satisfy the technical prong of the domestic industry requirement because they do not practice any asserted claim of the
Poeze Patents.” More specifically, Apple argued that Masimo failed to show that “the Masimo Watch met the ‘user-worn’ and blood oxygen measuring limitations of the asserted claims.” Judge Stark rejected that challenge too, concluding that “substantial evidence supports the Commission’s finding that, at the time of the complaint, the Masimo Watch was both user-worn and capable of measuring blood oxygen.”
Judge Stark then turned to “the economic prong of the domestic industry requirement.” With respect to this prong, he noted, “Apple argues the Commission erred in two respects: by crediting investments in non-patent practicing articles that were not, in Apple’s view, made ‘with respect to the articles protected by the patent,’ and by relying on purportedly improper investment accountings.”
As an initial matter, Judge Stark clarified that “whether a complainant’s investments are ‘with respect to’ the patent protected articles is a question of fact, not law,” and is therefore reviewed for substantial evidence. Applying that standard, he found substantial evidence that “the Commission did rely on the same article for both the technical and economic prongs of the domestic industry analysis; namely, the Masimo Watch, which the ALJ and Commission defined to include particular Masimo Watch prototypes, all of which were made as part of an iterative design process involving the Circle, Wings, RevA, RevD, and RevE models.”
Judge Stark also rejected Apple’s position that, “even if it was proper to view the various Masimo Watch prototypes as commensurate with Masimo Watch, the ALJ erred by also including in her analysis investments in the Circle Sensor and Wings Sensor, as these were non-patent practicing precursors to the patent-practicing RevA, RevD, and RevE models.” Judge Stark explained that “[n]othing in § 337 precludes a complainant from relying on investments or employment directed to significant components” that were “specifically tailored for use in an article protected by the patent.” He concluded that “substantial evidence supports the Commission’s finding that Masimo’s investments in the Circle and Wings Sensors were made as part of the same iterative design process Masimo undertook as part of its development of a single patent-practicing commercial product, and those investments led to specifically tailored, significant technical features of patent-practicing articles, including the RevA and RevD variants of the Masimo Watch.”
Judge Stark finally addressed Apple’s contention that “Masimo failed to provide a proper accounting of its purported investments” and that “the evidence on which Masimo relied was ‘wholly invented’ for litigation, lacked contemporaneous support, and was not verified by Masimo’s expert.” But, Judge Stark explained, these arguments effectively asked the court “to reweigh the evidence considered by the ALJ and the Commission and to reject the ALJ’s credibility determinations,” which the court could not do.
Accordingly, Judge Stark concluded “that Masimo met its obligation to satisfy the domestic industry requirement.”
Judge Stark then turned to Apple’s second principal challnge to “the Commission’s findings that the Apple Watch infringes the asserted claims and that those claims were not proven invalid.”
On infringement, Judge Stark noted that Apple argued that the Commission’s findings rested on “incorrect constructions of the claim terms ‘over’/’above’ and ‘openings’/’through holes.'” He disagreed, concluding that “the ALJ correctly determined [that] the plain and ordinary meaning of ‘over’ and ‘above,’ as used in the field of wearable medical equipment, relates to positions of the equipment’s components relative to other components, without any further restriction on the orientation of the device.” He further agreed with the ALJ’s rejection of Apple’s proposed construction that “would have required the claimed ‘openings’ and ‘through holes’ to be devoid of material, including even transparent material.”
Judge Stark next addressed Apple’s argument that the Commission erred in determining that the asserted claims were not invalid for lack of adequate written description. He concluded that “[s]ubstantial evidence . . . supports the Commission’s finding that the Poeze Patents provide adequate written description for [the patents].”
Judge Stark then turned to Apple’s obviousness argument based on the Lumidigm patent, “which generally discloses devices containing ‘electro-optical sensors’ that, in some embodiments, can be used for ‘biometric identification.'” He noted that the “Commission rejected Apple’s obviousness case after finding Lumidigm does not disclose (i) measuring blood oxygen level at the wrist, or (ii) transmissive windows extending across openings and within openings.” Judge Stark concluded “the ALJ, whose determinations were adopted by the Commission, committed no legal error and her factual findings were supported by substantial evidence.”
Finally, Judge Stark addressed Apple’s suggestion “that the Commission erred in concluding that prosecution laches did not render Masimo’s asserted patents unenforceable.” He concluded that “Apple has failed to demonstrate that the ALJ abused her discretion in rejecting it.” To the contrary, he explained, “it was entirely reasonable for the ALJ to find, based on the evidence before her, that Apple failed to meet its burden to prove that Masimo engaged in unreasonable and unexplained delay.”
Judge Stark also considered Apple’s remaining arguments and found them meritless.
As a result of Judge Stark’s analysis, the panel affirmed the judgment of the Commission.