5/24/23, 7:48 PM
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`Masimo Wants $3B From Apple Over Smartwatch IP, Jury Told - Law360
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`Masimo Wants $3B From Apple Over Smartwatch IP, Jury
`Told
`
`By Gina Kim
`Law360 (April 5, 2023, 10:23 PM EDT) -- Masimo Corp. told a California federal jury during opening
`arguments on Wednesday that Apple poached two employees to improperly obtain proprietary information
`it then used to launch a patent-infringing smartwatch, while Apple denied any intellectual property theft
`and blasted Masimo's purported bid for a staggering $3.1 billion in damages.
`
`Apple's Apple Watch is at the center of a trade secrets trial in which Irvine-based Masimo Corp. is seeking $3.1
`billion in damages. (iStock.com/:raditya)
`
`Wednesday kicked off the first day of a long-awaited trade secrets trial in a suit Irvine-based medical
`device manufacturer Masimo Corp. and its spin-off company Cercacor Laboratories Inc. lodged in 2020
`against Apple Inc. They accuse the Silicon Valley-based tech giant of improperly obtaining Masimo's
`proprietary and confidential information and using it to develop and launch its first Apple Watch as well as
`subsequent generations of the device.
`
`The patents at issue cover technology for a multistream data collection system used to noninvasively
`measure blood constituents, and a low-power pulse oximeter, all of which relate to technology that uses
`light to measure oxygen in the bloodstream.
`
`Joseph R. Re of Knobbe Martens, who represents Masimo, told the eight all-women jury members the
`story behind Masimo Corp. and its founder and CEO, Massi "Joe" Kiani, who co-invented the breakthrough
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`IPR2022-01291
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`Masimo Wants $3B From Apple Over Smartwatch IP, Jury Told - Law360
`5/24/23, 7:48 PM
`Masimo SET technology, also referred to as the modern pulse oximetry, with his colleague Mohamed Diab.
`That technology uses light sensors to measure how much oxygen is in an individual's blood.
`
`Today, Masimo's pulse oximeter devices are used in more than 200 million patients per year, Re said.
`
`"This is one of Orange County's greatest contributions to our healthcare system and mankind in general,"
`Re said, adding that Kiani's work eliminated prior issues like false alarms, and increased the number of
`true detections for blood saturation. Masimo's efforts also addressed problems affecting victims of the
`opioid epidemic and COVID-19 patients, Re said.
`
`Kiani's goal was to get pulse oximetry medical grade technology to as many people as possible, and the
`company set its sights on creating a wearable device that wasn't tethered to something else, Re said.
`
`Apple, which began developing its watch in February 2012, approached Kiani and his colleagues in 2013
`to discuss a potential partnership on pulse oximetry and other health indicators, Re told the jury. After a
`successful meeting with Kiani in May 2013, Apple mulled acquiring Masimo, but subsequently hired its
`then-Chief Medical Officer Dr. Michael O'Reilly later that summer.
`
`In October 2013, Apple launched a new project and put together a presentation for Masimo regarding a
`joint venture to develop pulse oximetry on a wearable device and noninvasive monitoring technologies,
`jurors heard.
`
`Apple, which was interested in breaking into the health care space, was the one coming into Masimo's
`arena, not the other way around, Re argued.
`
`Eventually, Cercacor's Chief Technology Officer Marcelo Lamego, one of Kiani's closest confidantes, also
`left to work for Apple in early 2014 after reaching out to Apple CEO Tim Cook to discuss Lamego's
`knowledge of the very technology Apple was working on for its watch, Re said.
`
`Lamego shared everything he learned from his time at Masimo spin-off Cercacor with Apple while
`initiating a dozen patent applications, Re said, "patents that we really should be co-inventors of."
`
`"It's a lot faster to get the information from people who have spent their lives studying it," Re added.
`
`Shortly after he was hired, Lamego's name began cropping up on Apple's patent applications for PPG
`technologies, jurors heard.
`
`Re told the jury that the plaintiffs' damages theory comes from Apple's unjust enrichment from
`misappropriating Masimo's proprietary information, but said it was up to them to decide what Masimo was
`entitled to.
`
`Masimo in January 2020 filed the suit against Apple, accusing it of infringing 12 health monitoring and
`technology patents.
`
`The company asserted several causes of action against Apple, including patent infringement, trade secret
`misappropriation under California's Uniform Trade Secrets Act, correction of inventorship and declaratory
`ownership of certain patents.
`
`On Wednesday, Joseph J. Mueller of WilmerHale shared Apple's side of the story with jurors. He contended
`that the trade secrets Masimo alleges Apple stole weren't trade secrets at all and denied that Apple
`employees stole anything from Masimo.
`
`"These are ideas long known to others in the field," Mueller began. "These can't be secrets, or some
`detailed ideas that Apple doesn't use and never has."
`
`And there's nothing wrong with Apple hiring O'Reilly or Lamego for their expertise, as they can work
`anywhere they wish, Mueller said.
`
`Masimo didn't launch its first W1 wearable pulse oximetry device watch until last year, Mueller said, years
`after Apple released its first watch in 2015.
`
`Throughout the development process for the Apple Watch, the company looked at recruiting additional
`talent to join the project and considered working with Masimo.
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`Masimo Wants $3B From Apple Over Smartwatch IP, Jury Told - Law360
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`But Apple felt Masimo's focus was too heavily on the clinical setting for an acquisition to makes sense,
`Mueller explained.
`
`He further denied that O'Reilly and Lamego shared Masimo's trade secrets with the tech giant, which has
`a corporate policy against misappropriation and required both men to sign those agreements.
`Furthermore, Lamego stayed at Apple for only six months, and his ideas weren't feasible for a consumer
`device like the Apple Watch, jurors heard.
`
`"Why do the plaintiffs focus so much on Dr. Reilly and Dr. Lamego?" Mueller asked. "They're seeking
`money and patents." From there, he used a screen before the jury to show them what he said was the
`plaintiffs are demanding in damages: $3,112,800,000.
`
`"This damage demand tells you a bit about why we're here and what's being sought by this case," Mueller
`said. "It's an enormous sum of money without the proper factual basis for it."
`
`He added that Masimo and Cercacor cannot claim they have patent ownership rights to Apple's work on
`the smartwatch, arguing that it was Apple's own employees who made the watch a reality.
`
`Kiani, who was the first witness to testify on Wednesday, told jurors he was interested in creating a wrist
`pulse oximeter during Masimo's early days, after receiving a request from former President Bill Clinton,
`who sought Kiani's help to address people overdosing on opioids at home.
`
`Jurors also saw a notebook Kiani kept from 1990, including a crudely-drawn sketch of a hand and an arm
`donning a device on the wrist, that Kiani said he hoped would measure oxygen levels in the blood and
`blood pressure, and began dedicating efforts to develop such a device in 2014.
`
`Kiani told jurors that Masimo created the Radius PPG, a battery-powered, tether-less, pulse oximetry
`fingertip device for continuous monitoring on the move, which was immensely successful for years,
`especially during the COVID-19 pandemic.
`
`The company transitioned from the Radius PPG to develop a mobile, wearable, wristwatch-style pulse
`oximeter device, jurors heard.
`
`Kiani said he sued Apple in 2020 after the company was granted in 2019 a series of patents relating to its
`smartwatch, with Lamego named as an inventor. Those patents included Masimo's material information
`"that were in our notebooks" and developed by Diab and others, Kiani testified.
`
`Although Kiani admitted on cross-examination that his companies do not own all forms of pulse oximetry
`devices and that he did not invent the idea, he also maintained that "we're the only company that has the
`technology that made a clinical difference."
`
`Mueller pointed out that Masimo came up with a device to take blood readings during movement, but the
`Apple Watch doesn't work during motion.
`
`"So everything we heard about the challenges developing a pulse oximetry device for when someone is
`moving wasn't what Apple was doing at all, isn't that right, sir?" Mueller asked.
`
`Kiani agreed.
`
`Testimony resumes Thursday.
`
`The patents-in-suit are U.S. Patent No. 10,258,265; 10,292,628; 10,588,533; 10,588,554; 10,624,564;
`10,631,765; 10,702,194; 10,702,195; 10,709,366; 6,771,994; 8,457,703; 10,433,776.
`
`Masimo is represented by Joseph R. Re, Stephen C. Jensen, Sheila N. Swaroop, Irfan A. Lateef, Benjamin
`A. Katzenellenbogen, Stephen W. Larson, Brian C. Claassen, Kendall M. Loebbaka, Adam B. Powell, Daniel
`P. Hughes, Brian C. Horne and Mark D. Kachner of Knobbe Martens.
`
`Apple is represented by Mark D. Selwyn, Thomas G. Sprankling, Joshua H. Lerner, Amy K. Wigmore,
`Joseph J. Mueller, Sarah R. Frazier and Nora Q.E. Passamaneck of WilmerHale, Brian A. Rosenthal of
`Gibson Dunn & Crutcher LLP, and Kenneth G. Parker of Haynes and Boone LLP.
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`https://www.law360.com/articles/1593689/print?section=competition
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`Apple v. Masimo
`IPR2022-01291
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`Masimo Wants $3B From Apple Over Smartwatch IP, Jury Told - Law360
`5/24/23, 7:48 PM
`The case is Masimo Corp. et al. v. Apple Inc., case number 8:20-cv-00048, in the U.S. District Court for
`the Central District of California.
`
`--Additional reporting by Hailey Konnath. Editing by Kristen Becker.
`
`All Content © 2003-2023, Portfolio Media, Inc.
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`https://www.law360.com/articles/1593689/print?section=competition
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`Apple v. Masimo
`IPR2022-01291
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