In a recent development, a federal appeals court has revived a U.S. sales ban on Apple's premium watches, potentially leading to the removal of the devices from stores for the second time in less than a month. The ruling, issued by the U.S. Court of Appeals in Washington, comes three weeks after it had initially blocked the ban, allowing Apple to resume sales of the Series 9 and Ultra 2 watches. This patent dispute revolves around a sensor, with the International Trade Commission ruling in late October that a blood-oxygen sensor in the Apple Watch models infringed on medical technology company Masimo's patents.

The temporary stay granted by the appeals court enabled Apple to continue selling the watches briefly, but the recent decision means that the company is no longer insulated from the U.S. market. The ban is set to be reinstated at 2 p.m. Pacific Time on Thursday, forcing Apple to halt sales of its latest watch models in the U.S. until at least 2024, or potentially redesign the devices to comply with the ITC's ruling.

Masimo's founder and CEO, Joe Kiani, hailed the decision as a victory for the integrity of the American patent system and the safety of people relying on pulse oximetry. He emphasized the importance of even the largest companies respecting the intellectual rights of American inventors and facing consequences for patent infringement.

In response to the ruling, Apple announced that it would begin selling versions of the Series 9 and Ultra 2 watches "without the Blood Oxygen feature" starting Thursday. The company is still attempting to persuade the federal appeals court to overturn the ITC's ruling. However, the ongoing dispute makes a settlement between Apple and Masimo unlikely, as Apple has vehemently denied infringing on Masimo's patents.

The sales ban will not affect Apple's less-expensive Apple Watch model, called the SE, which does not include the blood-oxygen sensor. Nevertheless, the blood-oxygen feature has been a significant selling point for Apple, positioning its watches as life-saving tools for health monitoring.

If the court does not grant Apple more leeway in its bid to overturn the ruling, the company is prepared to remove the blood-oxygen sensor from its watches. The potential redesign of the Series 9 and Ultra 2 models, excluding the sensor, has already received approval from the U.S. Customs and Border Protection, according to court filings by Masimo. The exact method of removing the sensor has not been disclosed, but analysts speculate that it could be achieved through a software update.

The appeals process is expected to take at least a year, further prolonging the uncertainty surrounding the availability of the Apple Watch models with the blood-oxygen sensors. Apple's annual sales of $383 billion may take a small hit if it is forced to pull its top-selling watches from the U.S. market. While Masimo argues that Apple's revenue primarily comes from the iPhone, Apple has positioned its watches as essential health-monitoring devices, making the blood-oxygen sensor a key feature.

Both Apple and Masimo have presented contrasting arguments in their filings with the appeals court. Masimo portrays itself as a pioneer in blood-oxygen sensor technology, alleging that Apple began poaching its employees as early as 2013. Masimo claims that Apple's use of the technology is unreliable and could damage its reputation and sales of its W1 medical watch. On the other hand, Apple denies infringing on Masimo's technology, stating that it has limited availability to consumers, and highlights its significant market share in the smartwatch industry.

As the legal battle continues, the fate of Apple's premium watches remains uncertain. The outcome of the appeals process and the potential removal of the blood-oxygen sensor from the devices will have significant implications for both Apple and Masimo, as well as the broader patent system and the future of wearable health technology.