Legal fight with Apple the latest saga in Joe Kiani’s high-tech career
Joe Kiani was a 15-year-old Iranian immigrant when he started attending San Diego State University in the 1980s. Before that, he graduated from Valhalla High School in El Cajon.
Last month he was interviewed by university president Adela de la Torre as a guest of the President’s Lecture Series. Speaking to de la Torre, he said his approach to business and life is to know that there are some problems that are way too big for one person to solve.
“If you try to attack those you may not get anywhere. You may harm yourself or the people you love,” Kiani said. “But you should go after the things you can fix. The things that are your size or maybe a little bit bigger than you. And I think if you do that, that will be your legacy.”
A legacy or not, Kiani has worked for decades to produce and perfect pulse oximetry. Pulse oximetry is a non-invasive way to test blood oxygen levels, which must be high enough for us to survive. While the expression is not widely known, the technology is known to anyone who’s had their blood oxygen level tested, by placing a finger in a comfortable clamp during a hospital visit.
Kiani and his company Masimo built their wealth and reputation on perfecting that technology. Masimo is a public company with annual revenues of about $2 billion.
Masimo has just won a crucial round in a lawsuit against Apple, which Kiani said tried to steal their technology to include it on their Apple Watch.
A federal appeals court and the U.S. Patent and Trademark Office seemed to agree, as they upheld Masimo’s patents and forced Apple to remove pulse oximetry from their watches.
Joe’s favorite professor
Fred Harris is an electrical engineer who taught at SDSU for 50 years, holding what he claims is the California State University record for the length of service for a professor. And he was at SDSU when Joe Kiani was in school.
Kiani cites him as a mentor. Harris said anytime they are together at a speaking engagement, Kiani will introduce him as my favorite professor.
“Now we’ve done this so often we have a little skit,” Harris said, adding that his followup line is, “Joe, it’s too late. I already turned in your grade.”
Pulse oximetry measures the oxygen saturation of your arterial hemoglobin, the protein in your red blood cells that delivers oxygen to your tissues.
“So if you’re breathing fine. If your heart is pumping right, you should be between 97 and 100 percent. But if your lung or heart has any problems, then that oxygen level could drop down to 80, 70, 60 (percent) to a level where people can’t survive,” Kiani said.
Pulse oximetry is well known for checking the blood oxygen levels of premature infants. But the old technology had a problem.
“The source of the problem was the monitors that monitor the blood, look at the blood through the skin by shining lights through the skin. And they look for blood flow through the capillaries,” Harris explained.
“What happens when a baby moves their fingers, they close the capillaries. And when they close the capillaries there’s no fresh blood flowing and they detect this as not enough oxygen.”
That false reading of not enough oxygen would cause NICU’s to provide too much oxygen, which will blind the babies by burning out their retinas. Harris said singer Stevie Wonder is the probably the best known person to be blinded as an infant in an oxygen tent.
Kiani’s innovation, that eliminated those false readings, had its origin in a class Harris taught about adaptive algorithms. Harris said Kiani and his business partner, Mohamed Diab, modified an algorithm that allowed pulse oximetry to spot those false oxygen readings.
“It’s basically an internal editor that says, ‘Can’t use this measurement, it’s invalid.’ And if you don’t use it for a measurement, it can’t make mistakes in bringing up or lowering the oxygen contents,” Harris said.
Kiani said he founded Masimo in his San Diego condo 35 years ago. After patenting his motion compensating technology, the rest was history. But it was a history spent defending his innovation and fighting for access to markets.
The battle with Apple
“I feel great!” That was Kiani’s reaction to a question about a federal appeals court decision last month.
The court upheld a U.S.Patent Office decision that the Masimo patent for pulse oximetry was valid, and Apple had acted unlawfully by using it in their watches.
Kiani doesn’t hesitate to blast the computer giant. He said the litigation followed a meeting he had with Apple executives and the subsequent defection of some Masimo staff to Apple.
“They stole our people. They stole our patents. They stole our property. And that’s not unusual for them,” Kiani said.
The legal battle with Apple was similar to another legal fight over Masimo technology and market access that occurred nearly 20 years ago with Nellcor, which ended up in U.S. District Court.
Kiani describes going $5 million into debt to pay the costs of being in court. But in the end, Masimo prevailed in that case as well with a favorable settlement.
Harris said the big money involved in medical technology can easily turn a company into a target for lawsuits.
“If you have a successful technology. Then you’re subject to attack by people with deep pockets. It’s as simple as that,” Harris said.
“Big companies truly believe they can bury the small company with legal fees. So they take what they like and they really assume you can’t stand up to them,” Kiani said.
When asked for comment on the ruling, an Apple representative replied by sending several documents, including many statements they said couldn’t be quoted directly.
Apple’s statement on the record said their appeal is ongoing and they “strongly disagree” with decisions in favor of Masimo.
“Pending the appeal, Apple is taking steps to comply with the ruling,” Apple said. “These steps include introducing a version of Apple Watch Series 9 and Apple Watch Ultra 2 in the United States without the Blood Oxygen feature.”
Today, Masimo is no longer a shoestring startup that can’t afford to defend their property in court. Kiani said he has acquired companies with promising technology, but he believes they were fair deals.
“I haven’t forgotten who we were. I still root for innovators and small companies,” he said. “Never will we step on companies, just because we think we can.”
An Iranian kid in San Diego
Joe Kiani’s father was an engineer and his mother was a nurse. They were also immigrants from Iran, who came to the U.S. in 1974.
“Unfortunately, in ‘79 when the Iranian revolution occurred, the hostage crisis occurred. So we went from being Persian princes and kings to being hostage takers. So that part was not easy,” Kiani said.
He remembers a day in Valhalla High school when someone put up an anti-Iran banner. But it was torn down by a friend of his who was on the basketball team.
Today, Kiani has gone a long way for a Valhalla graduate. He hosted Joe Biden at his Orange County home when he was running for president.
Harris remembers Kiani’s battle to get access to hospital markets. He had been locked out of that market thanks to “technology bundling” rules that were later ruled to be unfair. Companies would obligate hospitals to buy large orders of their equipment with the claim it would lower prices.
Harris remembers listening to KPBS Radio years ago when the question came before Congress.
“So I’m driving my car and I hear Joe’s voice on the radio because he was testifying before Congress and they played some of the testimony. Congress outlawed the idea of bundling technology with disposables. And that got him into the marketplace,” Harris said.
It’s taken some tenacity but that’s where he’s been ever since.