Masimo spent over $100 million to fight Apple, but could win big

Apple is facing real legal troubles due to its fight with Masimo over the blood-oxygen sensor found in some recent Apple Watch models, and it has engulfed the news cycle lately. In a stunning move, Apple paused Apple Watch sales in the U.S. via its store starting Dec. 21. This preceded an outright ban from the U.S. International Trade Commission, which started Dec. 26. Apple is appealing the ban, and the company was temporarily allowed to resume sales starting Dec. 27. But the legal battle with Masimo, the industry leader in blood-oxygen tech, is far from over.

We don’t often see companies go toe-to-toe with Apple very often. That’s because Apple has a lot of economic might. It can outlast opponents in legal battles thanks to seemingly endless cash flow. But in this case, Masimo is spending over $100 million on the fight, according to the Wall Street Journal. Masimo also has a history of spending big on legal battles — and coming out victorious. That’s what Masimo is counting on in its fight with Apple this time, and the fate of the company might depend on the outcome.

“No one is standing up to them,” said Masimo CEO Joe Kiani, in an interview with WSJ. “If I can do it, it might change Apple for the better.”

Masimo has a history of winning big settlements, and more importantly, licensing deals. The company has received lump sums from legal settlements in the past, totaling hundreds of millions of dollars. But Masimo has generated more, and recurring, revenue from the licensing deals that result. When a company is found to be in violation of a patent Masimo holds, it would need to create a licensing deal with Masimo in order to use the technology legally. These licensing deals have earned over a billion dollars for Masimo so far.

Kiani does recognize the uphill battle he faces, though. “They have unlimited resources,” he told WSJ.

Is a settlement the answer to the Masimo-Apple fight?

Kiani has said that Masimo is open to a settlement, which would end the legal dispute. Apple hasn’t been willing to meet Masimo at the bargaining table, however, and it does take two parties to make a deal. Given Apple’s bullish track record and expansive resources, we wouldn’t be surprised if it fought this legal challenge to the bitter end. Apple is likely extremely discontent with a settlement because it could mean it would have to share Apple Watch profits with Masimo via a licensing deal.

WSJ notes that Masimo made around $144 million in profit during 2022, and it has spent over $100 million fighting Apple. That means cash might eventually run out for Masimo before the legal challenge runs its course. Expect to wait a long while before this dispute is settled for good.