Apple was sued this week for Patent Infringement by Medical Device Pioneers over key Apple Watch Technologies – Patently Apple

One of the most interesting patent infringement cases in some time was officially filed on Thursday by Masimo and Cercacor, a company that spun off from Masimo. The companies claim that Apple has infringed on 10 of their patents in this 15 count case.

It's a dramatic case where Apple met with Masimo, was interested in a deal to incorporate their advanced technology associated with what became the PPG sensors on the backside of the Apple Watch. Yet once Apple met with Marcelo Lamego the Chief Technical Officer and Research Scientist of Cercacor and Michael OReilly, its Chief Medical Officer and Executive Vice President for Medical Affairs, they poached the two in order to cut Masimo and Cercacor out of any deal and royalties.

Everyone knows that business is cut throat, but if proven guilty, Apple's darker side will have been exposed. Yet for now, we're only hearing one side of the case. With Apple Watch being the number one smartwatch in the world, a lot will be riding on this case for both sides but especially Apple.

Statement of Facts

The following "Statement of Facts" is directly from the Masimo and Cercacor lawsuit as follows:

"Masimo's Formal Complaint before the court Masimo is a medical technology company that revolutionized noninvasive monitoring of physiological parameters, such as pulse rate, arterial oxygen saturation and many others.

Most of these parameters are measured using light that is transmitted through the body tissue. The received light, that has been attenuated by the various components of the body tissue, including the blood, is known in the industry as a photoplethysmograph or "PPG." The transmission and receipt of these light signals is typically accomplished through a sensor that is applied to a body part such as a finger, arm, toe, forehead or ear.

Before Masimo, these non-invasive measurements from the PPG were plagued by unreliability, often when the measurement was needed most, due to the person moving or having low peripheral blood flow (known as "low perfusion").

The industry had essentially given up on solving these problems, concluding they were largely unsolvable. In the medical context, clinicians had to live with the results patient monitors gave excessive false alarms, froze their measurements for prolonged periods of time despite potential changes in the physiological parameter (e.g., oxygen saturation or pulse rate), delayed notification of alarms due to long averaging times of sensor data, produced inaccurate measurements, or were unable to obtain data on the most critical patients and babies who cannot be instructed to stay still. Masimos pioneering technology, known as Masimo Signal Extraction Technology (Masimo SET), solved this problem and dramatically improved the reliability of monitoring and reporting physiological signals derived from the PPG.

Following its initial success with Masimo SET, Masimo invested heavily in developing additional breakthrough measurement technologies, such as non-invasively measuring total hemoglobin, carboxyhemoglobin, and methemoglobin. Masimo has continued to innovate, succeeding where others have consistently failed. Masimo was the first, and remains the only, company delivering these game-changing technologies to hospitals in the United States. Use of Masimos technology in the clinical setting has been proven to reduce blindness in premature infants, detect congenital heart disease in infants, save lives on the general care floor and post-surgery, and improve transfusion management, while saving money.

From its inception, Masimo has continuously developed cutting edge noninvasive patient monitoring technologies. Masimo sought and received numerous U.S. patents for many of its inventions. Masimos revolutionary technology was a key to its gaining significant market praise and penetration. After introduction into the market, many competitors, much larger than Masimo, used Masimos technology without a license, resulting in patent infringement lawsuits that ultimately confirmed the validity of Masimos innovations. But, Masimo maintains some technology as trade secrets. Masimo also closely guards its future product and market plans. Only select employees have knowledge of and access to these guarded secrets.

Masimos innovations also include important advances in sensor technologies that work together as part of Masimos system and algorithms. Masimos sensors are integral to the success of the revolutionary technologies Masimo has developed.

In 1998, Masimo spun certain technologies off into a new company, Masimo Laboratories, Inc. or Masimo Labs, to further research and develop the technologies. The name of the company was later changed to "Cercacor." Cercacor and Masimo have a cross-license agreement to facilitate confidential collaboration between the companies. Cercacor is not owned by Masimo.

Like Masimo, Cercacor is an innovator of non-invasive monitoring technologies. Cercacor is on the frontline of understanding how measuring, tracking, and analyzing physiological parameters can impact pre-diabetic and diabetic patients, sports training and performance and overall health and wellness principally in the consumer market. Cercacor continued the development that started at Masimo on non-invasive total hemoglobin (SpHb), methemoglobin (SpMet), and carboxyhemoglobin (SpCO) and other noninvasive physiological parameters.

Leading hospitals around the world use Cercacor technology licensed to Masimo and sold under the name Masimo rainbow SET. Like Masimo, Cercacor also maintains some technology as trade secrets, and Cercacor closely guards its future product and market plans. Only select employees have knowledge of and access to these guarded secrets.

Masimo and Cercacor carefully guard the secrecy of their confidential information and documents. For example, Masimo and Cercacor have policies regarding labeling confidential information and documents as "CONFIDENTIAL AND PROPRIETARY."

They also restrict these documents and information from disclosure to third parties and employees on a need-to-know basis. Masimo and Cercacor also have policies in place regarding the use of computers and related equipment that govern how their computer systems may be used. Those policies also govern the protection of Masimos and Cercacors confidential information.

Both Masimo and Cercacor have document management systems that restrict access to confidential documents to only those employees with proper security credentials and a need for access. Masimo and Cercacor also require employees to sign agreements precluding the employees from disclosing or making use of any confidential information except as authorized by Masimo and Cercacor and as necessary for the performance of the employees duties. Masimo and Cercacor also require third parties, including customers, to execute confidential non-disclosure agreements. Masimo and Cercacor implemented such policies and procedures to maintain the confidentiality of sensitive information. These policies remain in place today.

In 2013, Apple contacted Masimo and asked to meet regarding a potential collaboration. Apple told Masimo that Apple would like to understand more about Masimos technology to potentially integrate that technology into Apples products.

Apple and Masimo later entered into a confidentiality agreement, and Masimos management met with Apple. The meetings included confidential discussions of Masimos technology. After what seemed to Masimo to have been productive meetings, Apple quickly began trying to hire Masimo employees, including engineers and key management.

Masimo employed Michael OReilly as its Chief Medical Officer and Executive Vice President for Medical Affairs beginning in January 2008. As part of the Masimo executive team, OReilly was privy to extremely sensitive information, including information about mobile medical products and applications, wellness applications, clinical data gathering and analytics, and other technology of Masimo.

Upon information and belief, Apple employed OReilly in July 2013, shortly after the meetings with Masimo, to assist in wellness and mobile applications that include non-invasive measurement of physiological parameters. Not long after, by December of 2013, OReilly was already meeting with the FDA on behalf of Apple to discuss medical applications and discuss medical products that non-invasively measures blood constituents.

Apple Recruited key Masimo Personnel such as Marcelo Lamego

Apple systematically recruited other key Masimo personnel, such as Marcelo Lamego, who was the former Chief Technical Officer of Cercacor and a former Research Scientist at Masimo.

Lamego had unfettered access to Plaintiffs highly confidential technical information. He was trained and mentored at Masimo by the most skilled engineers and scientists, and was taught about the keys to effective non-invasive monitoring, something he was not involved in prior to Masimo. He was also exposed to guarded secrets regarding mobile medical products, including key technology and advance plans for future products.

Given what appeared to be a targeted effort to obtain information and expertise from Masimo and Cercacor, Masimo and Cercacor warned Apple about respecting their rights.

Shortly after joining Apple in January 2014, Lamego pursued on behalf of Apple numerous patent applications on technologies he was intimately involved in at Plaintiffs Cercacor and Masimo, and with which he had no prior experience or knowledge.

For example, Lamego is named as an inventor on U.S. Provisional Patent Application No. 62/043,294, filed Aug. 28, 2014 and titled "Reflective Surface Treatments for Optical Sensors." Related applications that also name Lamego as an inventor include U.S Patent Application Nos. 14/740,196 and 16/114,003, which issued as U.S. Patent Nos. 10,078,052 and 10,247,670

As another example, Lamego is named as an inventor on U.S. Provisional Patent Application No. 62/047,818, filed Sep. 9, 2014, entitled "Modulation and Demodulation Techniques for a Health Monitoring System." A related application that names Lamego as the sole inventor includes U.S. Patent Application No. 14/621,268, which issued as U.S. Patent No. 10,219,754.

As another example, Lamego is named as an inventor on U.S. Provisional Patent Application No. 62/056,299, filed on Sep. 26, 2014, and entitled Electronic Device that Computes Health Data. Related applications that also name Lamego as the sole inventor include U.S Patent Application Nos. 14/617,422, 15/667,832, and 16/700,710. The 422 Application issued as U.S. Patent No. 9,723,997 and the 832 Application issued as U.S. Patent No. 10,524,671.

As another example, Lamego is named as an inventor on U.S. Provisional Patent Application No. 62/057,089, filed on Sep. 29, 2014, and entitled Methods and Systems for Modulation and Demodulation of Optical Signals. Related applications that also name Lamego as an inventor include U.S Patent Application Nos. 14/618,664 and 15/960,507. The 664 Application issued as U.S. Patent Nos. 9,952,095.

Upon information and belief, Apple announced the first version of its watch in September 2014, and began shipping its watch in April 2015. The Apple Watch Series 3 was released on September 22, 2017, and upon information and belief had significant performance issues with the non-invasive physiological measurements.

Apple announced The Apple Watch Series 4 on September 12, 2018, and upon information and belief, that watch includes technology that tracks Masimos technology to solve some of the performance issues, including technology to which Lamego was exposed at Masimo and also technology for which he was an inventor while at Cercacor.

The Apple Watch Series 5 was announced on September 10, 2019 and released on September 20, 2019. Upon information and belief, the Apple Watch Series 5 also includes Masimos technology to solve some of the prior performance issues, including technology as to which Lamego was an inventor while at Cercacor."

Note that all emphasis found in the 'Statement of Facts' and all links to each of the patents were provided for by Patently Apple.

For more details, read the full Plaintiff's complaint filed with the court in the full SCRIBD document below, courtesy of Patently Apple. Be sure to read the Plaintiff's "Prayer for Relief" at the end of the lawsuit which is quite unique.

Masimo Corp and Cercacor Laboratories v. Apple by Jack Purcher on Scribd

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Apple was sued this week for Patent Infringement by Medical Device Pioneers over key Apple Watch Technologies - Patently Apple