Joe Kiani, the founder and CEO of Masimo, has spent $60 million fighting the nearly $3 trillion company in court over the Apple Watch, but he’s also facing a boardroom battle over his own consumer tech push.
May 2013, Joe Kiani, the founder and CEO of medical technology company Masimo, went to a meeting at Apple’s headquarters in Cupertino to discuss a potential collaboration. The consumer technology giant was in the process of developing the Apple Watch and exploring ways to incorporate different health sensors. Founded in 1989, Masimo is best known for its pulse oximeters – fingertip devices used by hospitals to measure the level of oxygen in patients’ blood.
It appears a majority of Masimo shareholders share this concern, as this week they voted to add Koffey and another Politan nominee, former Johnson & Johnson executive Michelle Brennan, to the board, following a heated proxy battle in which Koffey described Masimo’s consumer strategy as “everything everywhere all at once” in the shareholder letter.That said, the new board members and Kiani do appear aligned with the Apple litigation.
Part of his confidence stems from Masimo’s previous success in the courtroom battling larger companies over patent infringement. In 2006, Masimo reached a financial settlement with Nellcor that has since totaled around $800 million including damages and royalties and also removed the infringing product from the market. In 2016, Masimo settled with Philips for $300 million. Kiani says those lawsuits cost Masimo $43 million in legal fees – and netted the company over $1.1 billion dollars.
So far, there have been wins and losses on both sides. In May, the California trade secrets misappropriation case ended in a mistrial with the jury swinging 6-1 in favor of Apple. Apple says it will ask the court to dismiss the remaining claims. Kiani has vowed a retrial, attributing the mistrial to “unusual jury dynamics” – and next time around he’s hoping the judge will agree to exclude Apple customers from the jury box.
If an import ban goes into effect, there are many different scenarios that could unfold, says Presper. The parties could ultimately reach a settlement, licensing agreement or partnership, though, in some cases, a patent infringer can institute a redesign or disable the infringing feature. “Maybe they'll find world peace,” Presper says of the Apple and Masimo fight. “A lot of it depends on the personalities involved.
Skepticism about this multi-pronged approach is likely what enabled the activist investor Politan to win two board seats. In his letter to shareholders, Politan’s Koffey wrote he believes there are certain “adjacent markets” where Masimo can be successful, including moving patient care into the home, but launching so many different products at the same time was “increasing the likelihood that [Masimo] fails at all of them.”he was contemplating leaving the company if Koffey won.
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