A Delaware company by the name of Valencell Inc. has filed a patent infringement lawsuit against Apple. Valencell asserts that Apple and Fitbit products infringe on Valencell's intellectual property that is primarily found in four distinct patents presented in our report. According to their website, "Valencell develops high-performance biometric sensor technology and licenses its patent-protected technology to consumer electronics manufacturers, mobile device and accessory makers, sports and fitness brands, gaming companies, and first-responder/military suppliers for integration into their products. Valencell's PerformTek-powered sensor technology is the most accurate wearable biometric sensor technology that continuously measures heart rate and activity." According to Valencell, Apple's Senior Partnership Manager originally met with Valencell to form a partnership but instead used Valencell's technology for the Apple Watch without licensing Valencell's technology. Within Valencell's formal complaint before the Court, they regrettably stated that basically stealing ideas is a "practice consistent with the statement by Apple CEO Steve Jobs that Apple has 'always been shameless about stealing great ideas.'" 

Valencell's Allegations

The official Valencell complaint before the court states the following in full: "On information and belief, in or around February 2013, Apple assembled a team to develop and/or implement the Apple Watch. At that time, Apple intended to incorporate a heart sensor into the Apple Watch. Around that same time, Liang Hoe, a Senior Partnership Manager at Apple, contacted Valencell regarding a partnership opportunity. Apple expressed an interest in Valencell's heart sensor technology.

On information and belief, beginning in March 2013, Apple agents repeatedly accessed www.valencell.com (the "Valencell Website") from at least the following IP addresses: 17.202.109.239, 17.208.106.158, 17.114.122.4, 17.216.30.100, 17.88.158.254, 17.209.11.188, 17.208.31.179, 17.208.110.251, 17.221.47.91, 17.247.87.225 (collectively the "Apple IP Addresses). Each of the Apple IP Addresses is assigned to Apple.

The Valencell Website contains various white papers, which relate to its biometric sensor solutions. Valencell offers such white papers in exchange for various identifying information regarding the downloader. On information and belief, Apple repeatedly accepted this offer, but obtained such white papers by providing fictitious information. On March 27, 2013 and May 5, 2014, one or more Apple agents downloaded the "PerformTek Precision Biometrics: Engaging the Burgeoning Mobile Health and Fitness Market" white paper from Valencell using fictitious names. On March 10, 2014 and April 23, 2015, one or more Apple agents downloaded the "Earbud-Based Sensor for the Assessment of Energy Expenditure, Heart Rate, and VO2 max" white paper from Valencell using fictitious names. On April 1, 2015 an Apple agent downloaded the "Earbud-Based Sensor for the Assessment of Energy Expenditure, Heart Rate, and VO2 max" white paper from Valencell using a fictitious name.

On information and belief, the following Apple agents accessed the Valencell Website: Brian Land, Matt Last, Nancy "Wren" Dougherty, Roger Miller, Thomas Pham, Mark Bagnola, and Mitch VanBruggen. Each of these individuals was involved in the design and/or implementation of the Apple Watch. Moreover, each of these individuals was involved in the design and/or implementation of the heart sensor in the Apple Watch.

On information and belief, Apple accessed the Valencell Website to obtain information regarding the structure and operation of PerformTek-Powered products. In June 2013, Apple met with Valencell employees, including Dr. Steven LeBoeuf, to discuss incorporating PerformTek-Powered features into some of Apple's products. The Valencell Website provides notice that PerformTek-Powered products require a license to Valencell's patents, including the patents-in-suit. Apple reviewed this notice and requested Valencell provide it with PerformTek-Powered products.

On information and belief, in or around the summer of 2013, Valencell demonstrated a prototype PerformTek-Powered watch to approximately 15 Apple employees. The back of the watch included a heart-rate monitor that was substantially similar to the Apple Watch. One or more of the Apple employees in attendance was involved in the design and/or implementation of the Apple Watch.

On information and belief, in or around August 2013, Apple received PerformTek-Powered products. Between September 2013 and March 2014, Apple conducted detailed testing on these products, including an analysis of the product circuitry.

On information and belief, Apple expressed great interest in Valencell's wrist-based heart sensor technology. Throughout 2014, Apple repeatedly requested information from Valencell regarding such technology. Apple did not sell any wrist-based products at that time. The only wrist-based product that Apple sells is the Apple Watch. The Apple Watch was the only wrist-based product that Apple was working on in 2014. In December 2014, Apple met with Valencell employees, including Dr. LeBoeuf, to discuss Valencell's wrist-based technology.

On information and belief, Apple began shipping the Apple Watch on April 24, 2015. Since at least that date, Apple has sold the Apple Watch in the United States. The Apple Watch contains a heart rate sensor, which it uses to calculate the pulse of the end user.

On information and belief, Apple solicited technical information and know-how from Valencell on the false premise that it wished to license Valencell's PerformTek Technology. Apple did not have an intention of licensing Valencell's PerformTek Technology. Instead, Apple's interaction with Valencell was fueled by a business decision that the benefits of infringing upon Valencell's patented technology outweigh the risk of being caught and ultimately forced to pay damages. This practice is consistent with the statement by Apple CEO Steve Jobs that Apple has 'always been shameless about stealing great ideas.' Further, Apple is knowingly using Valencell's patented technology in an effort to achieve a licensing rate that is below a reasonable royalty."

The Four Patents Presented in this Case

Count One, Infringement of patent number 8,923,941 entitled "Methods and apparatus for generating data output containing physiological and motion-related information."

According to Valencell's complaint before the court, "The Apple Watch directly infringes at least claim 14 of the '941 patent. The Apple Watch is a wearable device and includes a housing and a chipset enclosed within the housing. The chipset includes at least one PPG sensor, one motion sensor, and one signal processor that is configured to process signals from the motion sensor and the PPG sensor to reduce motion artifacts from the PPG signals. The Apple Watch housing includes at least one window that optically exposes the at least one PPG sensor to a body of a subject wearing the device. The Apple Watch housing includes a non-air light transmissive material in optical communication with the at least one PPG sensor and the window.

Valencell has been damaged as a result of Apple's infringing conduct described in this Count. Apple is, thus, liable to Valencell in an amount that adequately compensates Valencell for Apple's infringements, which, by law, cannot be less than a reasonable royalty …"

Count Two, infringement of patent number 8,886,269 entitled "Wearable light-guiding bands for physiological monitoring." According to Valencell's formal complaint, "The Apple Watch directly infringes at least claim 1 of the '269 patent."

Count Three, infringement of patent number 8,929,965 entitled "Light-guiding devices and monitoring devices incorporating same." According to Valencell, "The Apple Watch directly infringes at least claim 1 of the '965 patent."

Count Four, infringement of patent number 8,989,830 entitled "Wearable light-guiding devices for physiological monitoring." Valencell states that "The Apple Watch directly infringes at least claim 1 of the '830 patent."

Other Counts against Apple

Beyond the four patents noted above, Valencell filed several other counts against Apple including "Breach of Contract" (Counts 5,6 &7) and "Unfair and Deceptive Trade Practices/Unfair Competition" in Count 8.

The patent infringement case presented in today's report was filed in the North Carolina Eastern District Court. The Presiding Judge in this case is noted as being Judge James C. Dever. Beyond the formal complaint noted in our report, you could also review Valencell's formal press release here.

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