Apple facing an Apple Watch ban

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Apple witnesses testify in a $3.1 billion patent lawsuit that claims industry secrets were stolen to build Apple Watch.

The International Trade Commission backed Masimo, a medical firm suing Apple, over patent infringement allegations. The case has moved to trial, and witnesses have been giving testimony since Thursday.

Little has been shared about the proceedings, but a legal affairs journalist named Meghann Cuniff wrote about some of the key moments so far. The high-level view of the case is simple — Apple poached two high-level executives that allegedly provided trade secrets to build health sensors on Apple Watch.

The full report details a back-and-forth between Apple's key witnesses and Masimo's lawyers. The employees in question, Marcelo Lamego and Michael O'Reilly, both testified that they never incorporated Masimo's intellectual property into their Apple work.

Details obtained from internal documents and emails revealed Apple was looking to work with Masimo and its affiliate Cercacor Laboratories, thanks to their expertise and history in developing medical technology. This was a pursuit known as Project Everest at Apple, and was occurring even as Apple hired two of their employees in key roles.

In July 2013, Michael O'Reilly joined Apple as the newly minted Chief Medical Officer, which was the role he held at Masimo previously. Concerns were raised about hiring him while talking to Masimo — referring to the situation as "bad Karma."

However, Apple then hired Ceracor Chief Technical Officer Marcelo Lamego to the Apple Watch team. Yet another possible conflict with Project Everest.

"We considered the need to relate these things to each other. We decided, ultimately, 'No, people are free to interview and change jobs as they wish," said Steve Hotelling, a 21-year Apple employee and the current vice president for hardware technologies. "He's a qualified candidate, so we should pursue the interview independent of Project Everest."

Lamego told Tim Cook in an email that he could add significant value without conflicting with the IP he developed with Masimo. This was used as part of the argument that Apple took confidentiality seriously.

He was only with Apple for six months, but he filed twelve patent applications in that time — five of which are involved in the trial. Lamego left because Masimo had sent a threatening letter to Tim Cook, which had a chilling effect on his work.

Despite pressure from Masimo's lawyers, Apple's witnesses deflected each accusation and piece of evidence. Apple continues to attest that these people were hired for their expertise in their field, not the corporate secrets they had access to.

The case coverage in the report ended Monday, so no details of Tuesday's proceedings were included.

The case is set to continue through the week, with jury deliberations beginning as soon as next week. Apple is in danger of facing a ban of the Apple Watch Series 6 and later if Masimo wins its case.

Wesley Hilliard

Wesley Hilliard served 10 years in the US Navy as a Nuclear Power Electrician. He jumped careers based on his love for technology and has been working for AppleInsider since 2019. Today he is an Assistant Editor, Writer, Podcast Cohost, SEO Specialist, and Social Media Manager for the company.