ITC Order Banning Apple Watch Imports Creates US Risk: Amicus Brief

The International Trade Commission’s October order preventing Apple from importing its Series 9 and Ultra 2 watches based on allegations of patent infringement by medical device company Masimo -- which doesn’t currently sell its watches in the U.S. -- “creates serious risks for U.S. businesses,” NetChoice said Monday in a news release.

NetChoice joined TechNet, ACT|The App Association and Chamber of Progress Friday in a motion for leave to file an amicus brief in support of Apple in Apple v. ITC and Masimo before the U.S. Court of Appeals for the Federal Circuit (Fed. Cir. # 24-1285).

The ITC is limited under a rule to allow only patentees with actual products and a “true domestic market,” whether their own or those under license, operating in the U.S. to bring claims, the motion said. “Initiating investigations and issuing orders without this critical statutory safeguard being met,” as the ITC did here, could “increase the number of unfounded exclusion orders that are entirely divorced from the ITC’s foundational mission to protect established United States markets, to the detriment of American innovators and the public,” the motion said. The order puts the ITC “directly at odds with its statutory mandate to protect domestic industry,” it said.

The ruling gives patentees “too easy a route” through the ITC to justify the agency’s “broad exclusion powers,” the motion said. Innovators like amici’s members may have to cut investment in “job-creating segments” such as research, development and manufacturing “to instead defend against an increasing number of improper ITC investigations and the threat of exclusion of their products” from the U.S. brought on by the probes, it said. Such an order also could have an impact on amici’s members that are importers or on the “ecosystem of jobs” surrounding importers, the motion said.

NetChoice's member companies, including Apple, which did not participate in preparing the brief, have taken “substantial risks to develop new domestic markets and have no interest in being surprised by potentially devastating ITC investigations and exclusion orders after they have successfully grown markets for their products,” the motion said. “Meanwhile, the patentee who sits back can avoid all the risk associated with developing a new market and, if granted an exclusion order, effectively remove competitors from the market that others built,” it said. That could disincentivize American companies from participating in the domestic market, it said.

If the ITC’s order stands, “it would set bad precedent supporting unfounded exclusion orders that are counter to the ITC’s goal of protecting actual United States markets,” said Nicole Saad Bembridge, associate director of the NetChoice Litigation Center. “We ask the Court to reverse the Commission’s findings and restore the domestic industry requirement to the pro-innovation role it was meant to play.”

Apple doesn’t oppose the motion and may file a response, the motion said. Intervenors Masimo and Cercacor Laboratories don’t consent to the filing of the brief but didn’t indicate if they would file a response in opposition to it.