Alivecor, Inc. v. Apple, Inc.

Background

AliveCor challenged Apple’s removal of third-party access to the HRPO heart-rate algorithm from Apple Watch Workout Mode. Apple replaced HRPO with HRNN when it introduced watchOS 5. HRPO was particularly suited to determining heart rhythm, while Apple said HRNN addressed problems with HRPO, including the need to select a specific exercise type, engineering costs associated with exercise-specific programming, battery use, and storage use.

AliveCor’s Kardia app included SmartRhythm, a feature designed to alert users to possible atrial fibrillation and prompt them to take an electrocardiogram. SmartRhythm worked with AliveCor’s KardiaBand, which had electrocardiogram sensors and had been cleared by the Food and Drug Administration as a medical-device accessory for Apple Watch. After Apple introduced HRNN, AliveCor said SmartRhythm no longer worked properly, withdrew the feature from its app, and stopped selling KardiaBands in June 2019. Apple disputed whether the change impaired SmartRhythm.

AliveCor asserted monopolization and attempted-monopolization claims under Section 2 of the Sherman Act, including theories involving technological tying, exclusionary design changes, implicit tying, aftermarket monopolization, raising rivals’ costs, and leveraging. AliveCor also asserted a claim under California’s Unfair Competition Law.

Expert and Evidence Motions

The court denied AliveCor’s motion to exclude opinions and testimony from Apple’s economist, Dr. Lauren J. Stiroh. The court found that her opinions about Apple’s procompetitive reasons for changing Workout Mode were relevant and sufficiently reliable for the purposes presented. The court stated that her underdeveloped affirmative opinion defining a two-sided market would not be permitted at trial, but that she could testify in rebuttal that an opposing expert omitted a relevant, undefined market. Because the court granted Apple summary judgment on product-improvement grounds and the affirmative market-definition testimony would not change the result, AliveCor’s challenge to that testimony was denied as moot.

AliveCor’s motion to exclude Sarah Butler’s survey opinions was denied as moot because neither party relied on Butler’s report or testimony in the summary-judgment motions. AliveCor’s motion to strike portions of Dr. Stephen Waydo’s declaration was denied. The court found that Waydo had personal knowledge of Workout Mode’s architecture and could offer lay opinions about the changes needed to report HRPO values.

Apple’s motion to exclude Dr. Roozbeh Jafari was granted. The court allowed consideration of Jafari’s opinions about how watchOS 5’s source code differed from watchOS 4 concerning the heart-rate information supplied to SmartRhythm. But the court did not consider his opinion that watchOS 5 generally “broke” SmartRhythm because his experiment used too few samples to reliably support that broader conclusion. AliveCor’s motion for leave to file a sur-reply was denied.

Apple’s motion to exclude Dr. Michael Cragg was denied. The court found that Cragg reliably applied the hypothetical-monopolist test to define relevant antitrust markets and that Apple’s objections to his failure to consider HRNN went to the weight and credibility of his testimony rather than its admissibility.

Summary Judgment on the Sherman Act Claims

The court denied AliveCor’s motion for partial summary judgment and granted Apple’s cross-motion for summary judgment. The court held that the undisputed evidence showed that replacing HRPO with HRNN was a product improvement. Under Ninth Circuit precedent discussed in the opinion, a product design change that provides a new consumer benefit does not violate Section 2 unless accompanied by additional anticompetitive conduct. The court also stated that a monopolist generally need not preserve an older technology merely because a competitor’s product worked better with it.

The court rejected AliveCor’s arguments that HRNN was not an improvement because HRPO sometimes produced a high-confidence reading faster during the first minute of a workout, because Apple allegedly did not advertise HRNN, or because online users complained about missing heart-rate readings. The court concluded that these points did not create a genuine dispute over whether HRNN improved Workout Mode for exercise purposes.

The court further held that AliveCor had not produced evidence of the required additional conduct. It found that evidence of an intent to harm competitors was not enough. The court also noted that AliveCor had access to the Tachogram application programming interface, which supplied the same type of heart-rate information Apple used for its irregular-rhythm feature, even though AliveCor preferred the discontinued HRPO data for continuous monitoring. Because the product-improvement finding was dispositive, the court did not decide Apple’s alternative arguments that AliveCor had failed to define all relevant markets or establish antitrust injury.

California Unfair-Competition Claim

The court granted summary judgment to Apple on AliveCor’s California Unfair Competition Law claim. AliveCor sought an order requiring Apple to restore HRPO to Workout Mode and provide HRPO-based heart-rate values to third-party developers.

The court ruled that the requested injunction was not workable because AliveCor did not provide practical details about how HRPO would be reinserted, how the data would be stored, or what the proposed solution would cost in money, battery life, or storage. The court also found that an injunction requiring ongoing supervision of Apple’s algorithms could interfere with product improvements. In addition, the court found that AliveCor had not shown that monetary relief would be inadequate for its past harms, particularly because AliveCor had offered expert testimony attempting to quantify those harms. The court did not reach Apple’s remaining arguments concerning the California claim.

Disposition

AliveCor’s motion for partial summary judgment was denied. Apple’s motion for summary judgment was granted. AliveCor’s motions concerning Dr. Stiroh, Sarah Butler, and portions of Dr. Waydo’s declaration were denied; the Butler motion was denied as moot. Apple’s motion to exclude Dr. Michael Cragg was denied. Apple’s motion to exclude Dr. Roozbeh Jafari was granted. AliveCor’s motion for leave to file a sur-reply was denied. The order was filed provisionally under seal, and the parties were ordered to submit a joint sealing motion within 21 days.