WiseWear Chapter 11 bankruptcy blamed on Apple's decision to deactivate Apple Watch diagno...
WiseWear, a San Antonio wearable device startup, blames Apple for causing it to file for bankruptcy on Wednesday, claiming the decision to deactivate the Apple Watch diagnostic port caused patents it held to reduce in value, in turn causing it to fail to raise $2 million in funding.
WiseWear produced wearable devices that could track a user's activities and provide distress messaging alerts, but designed them to be more like jewelry. Items from the firm were sold by retailers including Macy's and Nordstrom, with bracelets made with premium materials including gold, rose-gold, and palladium.
The Chapter 11 bankruptcy filing was caused by the company's failure to secure $2 million in Series A financing to continue operations, reports MySanAntonio. The firm's bankruptcy lawyer, Ron Smeberg, called it "a very promising company," before asserting that the funding failure prevented it from achieving large-scale production, something Smeberg suggests could have created economies of scale and reduced the price of its products.
The reason for the funding round's failure is claimed to lie in WiseWear's acquisition of Reserve Strap Inc. last year, buying the firm's assets and liabilities in exchange for $505,000 in convertible notes. Reserve Strap had designed a "battery band" that used the diagnostic port on the Apple Watch to charge the wearable device, a design the firm quickly patented.
In April 2016, the watchOS 2.0.1 update included a change to the Apple External Accessory Protocol that disabled the Reserve Strap's functionality to pass charge through the port. At the time, Mashable reported Reserve Strap suspended orders for the $250 band, which had already missed its original shipping date for the accessory by six months.
WiseWear claims that "Apple turned off the port through an operating system change" once it was proven the band was a viable product, effectively making the product "unusable for its designed purpose."
"This Reserve Strap product couldn't be brought to market because of the fact that Apple changed" watchOS to turn off the port, Smeberg insists. By turning it off, Smeberg believes the patent lost its value, making it harder to secure funding "because there's questions about the viability of your products, at a couple of main ones."
According to Smeberg in the bankruptcy court filing, Apple's action amounts to "an illegal restraint of trade." The firm believes it can also raise "patent infringement actions against Apple related to the Apple Watch and distress messaging function."
Despite the accusations in the court filing, it is unknown if legal action will be attempted against Apple by the firm's representatives. Considering the purchase of Reserve Strap's assets would have taken place after the cancelation of orders, and that the patent would in theory have devalued before the acquisition as well, it seems unlikely an effort to sue Apple over the matter will be that profitable, if successful.
WiseWear produced wearable devices that could track a user's activities and provide distress messaging alerts, but designed them to be more like jewelry. Items from the firm were sold by retailers including Macy's and Nordstrom, with bracelets made with premium materials including gold, rose-gold, and palladium.
The Chapter 11 bankruptcy filing was caused by the company's failure to secure $2 million in Series A financing to continue operations, reports MySanAntonio. The firm's bankruptcy lawyer, Ron Smeberg, called it "a very promising company," before asserting that the funding failure prevented it from achieving large-scale production, something Smeberg suggests could have created economies of scale and reduced the price of its products.
The reason for the funding round's failure is claimed to lie in WiseWear's acquisition of Reserve Strap Inc. last year, buying the firm's assets and liabilities in exchange for $505,000 in convertible notes. Reserve Strap had designed a "battery band" that used the diagnostic port on the Apple Watch to charge the wearable device, a design the firm quickly patented.
In April 2016, the watchOS 2.0.1 update included a change to the Apple External Accessory Protocol that disabled the Reserve Strap's functionality to pass charge through the port. At the time, Mashable reported Reserve Strap suspended orders for the $250 band, which had already missed its original shipping date for the accessory by six months.
WiseWear claims that "Apple turned off the port through an operating system change" once it was proven the band was a viable product, effectively making the product "unusable for its designed purpose."
"This Reserve Strap product couldn't be brought to market because of the fact that Apple changed" watchOS to turn off the port, Smeberg insists. By turning it off, Smeberg believes the patent lost its value, making it harder to secure funding "because there's questions about the viability of your products, at a couple of main ones."
According to Smeberg in the bankruptcy court filing, Apple's action amounts to "an illegal restraint of trade." The firm believes it can also raise "patent infringement actions against Apple related to the Apple Watch and distress messaging function."
Despite the accusations in the court filing, it is unknown if legal action will be attempted against Apple by the firm's representatives. Considering the purchase of Reserve Strap's assets would have taken place after the cancelation of orders, and that the patent would in theory have devalued before the acquisition as well, it seems unlikely an effort to sue Apple over the matter will be that profitable, if successful.
Comments
They went bankrupt due to the fact that they couldn’t get investor money because they were dumb enough to buy a company mainly for its patents based around a technology that didn’t belong to them and was basically a diagnostic port that the owning company didn’t even acknowledge as existing, let alone promising would be around forever.
And they reckon this was Apple’s fault.
Dream on.
Apple can design its products however it wants.
It should even remove the port since that can get corroded or short the phone.
It is better to magnetically charge the phone and keep all of the electronics sealed.
I can't believe that the founder of this company honestly didn't stop for a moment before investing all this time and money into creating an add-on to a product that belongs to another company, using a port that wasn't even approved by Apple for use in 3rd-party products! Did he honestly think that Apple would have no problem with it? Look how hard it is to develop products using the lightning-port! You don't see many of those things for a reason.
Not that I’m one to gloat, that would be unbecoming.
Why is this port there and what is it used for (or, will it be used for)?
It's called a diagnostic port, but as this this example shows, it can be used for more than just diagnostics. And, its questionable that it is even being used for diagnostics since Apple Stores cannot access it. (Repair centers might be able to -- I don't know that).
But, in any case, an i/o port can enable not just an external battery but external sensors to be added to the watch. That could add an enormous amount of functionality to the watch. But, even just an external battery could be a great enhancement to the watch because, one of the major complaints is that marathoners can't use it because the battery can't last through a marathon.
So why is Apple being so secretive about this port (even giving the port a misleading name) and not exploiting this feature (or allowing others to exploit it)? I suspect that we will find out during some September keynote when Apple uses it to add some wonderful new functions to the watch.
No pejorative comments are appropriate about this company or Apple. Wisewear made a bet, too large a bet, and lost.
Apple undoubtedly had something in mind when these ports were developed. It remains to be seen what they have in mind and even whether the ports will continue to exist.
Smart money is waiting for Apple to issue documents detailing support for the hardware, then designing the hell out of it.
I found an article on ZNET from 2015 discussing the Reserve Band, and warning of the potential consequences of developing products utilizing the port.
http://www.zdnet.com/article/apple-watch-leave-that-diagnostic-port-alone/
That to me is the important part of this story. I couldn't care less if a startup business model was trashed after Apple removed a port on a future product; but altering a product after the customer owns it, really redefines "ownership" for modern times, and speaks more to customers rights than Apple's here.