Apple’s anti-competitive tactics must be stopped

Inventors have accused Apple of stealing technology for decades, but until recently, most have been dismissed by the public or bullied by threats of legal and financial ruin from Apple. Some people just don’t want to believe that the world’s largest company is also the world’s most dishonest, and that’s the way Apple likes it.

But all of this has been coming to a head over the last year. Earlier this year, a judge with the U.S. International Trade Commission (USITC) ruled that Apple infringed on patents from an American company called Masimo in the Apple Watch Series 6, 7 and 8. As a result, the ITC has recommended banning further imports of Apple Watches that infringe these patents at the border. This was the second case this year in which the ITC ruled that Apple stole patents in the Apple Watch and recommended a ban. The rulings have given U.S. innovators and inventors hope that there would finally be accountability for Apple’s well-known but barely addressed dishonesty.

Apple is not taking this lying down, waging a PR and legal offensive to stop it. Its last-ditch efforts to fight this import ban are the actions of a monopolist, convicted of breaking the law, to avoid punishment for its antisocial, anti-competitive actions.

One of Apple’s tactics is to exploit the anxieties of veterans. Seemingly out of nowhere, a series of curiously timed opinion pieces are advancing a false narrative that an import ban would prevent veterans from accessing a piece of software called NightWare, which is designed to help individuals suffering from post-traumatic stress disorder. This is categorically false; rather than finding a way to properly license or acquire the technology, Apple is using veterans to influence politicians in Washington, D.C., regarding a matter that has nothing to do with NightWare technology. The company’s only goal seems to be to further its patent infringement market dominance, and it’s shameful.

Yet this behavior is de rigueur for the world’s largest company and must be seen through the lens of the ITC’s decisionmaking process. One of the most challenging areas of antitrust enforcement is the intersection of antitrust and intellectual property. The former seeks to stimulate competition. The latter seeks to protect innovation. There is no greater offense to both than when a dominant firm infringes the patent of a smaller rival, who is an actual or potential competitor.

Apple has done so, repeatedly, as part of an overall strategy of dominance that harms consumers. It raises prices, denies consumers choice, lowers quality and dampens the incentive of sellers of complementary or competing products to innovate. It must be held accountable for its anti-consumer, anticompetitive actions, which also violate intellectual property law. 

In this case, Masimo invented, sells and licenses noninvasive technologies that monitor physiological parameters to hundreds of companies, supplying the technology to hospitals and individuals. It could easily expand the output if it were not blocked by Apple’s bundling of products incorporating the stolen technology.

In fact, Apple has abused its market power as a gatekeeper by bundling an inferior technology into its products. Thus, there are numerous channels through which the technology could be distributed. Masimo’s willingness and ability to license and partner with large numbers of companies and its effort to license its technology to Apple suggests it could meet demand, but for Apple’s desire to use the technology to strengthen its hold on the bottleneck and market. 

What makes this theft particularly egregious is that Apple produces an inferior product that performs worse than the true patent holder. It also took patents from a company whose production facilities are U.S. domestic but uses the stolen intellectual property to produce them in China.

On these grounds alone, the ban on importation of the devices is entirely appropriate. There is no doubt that better use can be made of this intellectual property by its rightful owner and the many firms to which it has licensed its use. 

The ITC should make it clear that this is an instance where intellectual property and antitrust law converge so there is no conflict between the two legal standards. Similarly, D.C. politicians should not succumb to Apple's false pressure campaign. Doing so would stand up for competition, the best form of consumer protection, and the superior approach to defending and promoting the public interest.

Mark Cooper is a senior fellow at the Consumer Federation of America.