A U.S. appeals court has granted Apple (AAPL.O) a temporary reprieve, allowing the tech giant to resume sales of its flagship smartwatches. This decision comes after the U.S. International Trade Commission (ITC) imposed an import ban on Apple Watches in a patent dispute related to medical monitoring technology.

Apple swiftly filed an emergency request with the U.S. Court of Appeals for the Federal Circuit, seeking to halt the ITC’s order, which alleged that Apple had infringed on patents held by Masimo (MASI.O), a medical technology company based in Irvine, California.

The ITC had prohibited the import and sale of Apple Watches equipped with technology for blood-oxygen level monitoring, citing patent infringement. Apple, in response, argued that Masimo’s legal actions were aimed at creating obstacles for Apple’s competing smartwatch and refuted allegations of technology theft.

The ongoing legal battle could potentially result in significant financial consequences for either company, leading to a substantial settlement or the implementation of a technological workaround by Apple. Despite the financial implications, industry analysts suggest that the negative publicity surrounding the lawsuit may be a more significant concern for Apple.

Stuart Cole, Chief Macro Economist at Equiti Capital, commented, “The bigger issue is that this is not very good PR for Apple, suggesting as it does that Apple is stealing technology from competitors rather than developing its own.”

While Masimo’s shares experienced a nearly 4% decline following the court’s decision, Apple’s shares remained largely unaffected.

The appeals court’s four-paragraph ruling temporarily lifts the ban while the court considers Apple’s motion for a more extended pause during the appeals process. The court has given the ITC until January 10 to respond to Apple’s request.

Despite an appeal to the Biden administration to veto the ban, Apple’s request for a pause was not granted until the appeals court intervention. Apple has indicated that it is actively exploring legal and technical options to address the situation.

Meanwhile, U.S. Customs and Border Protection is evaluating redesigned versions of Apple Watches to determine if they infringe on Masimo’s patents and can be imported. A decision by the customs agency is expected by January 12.

Sales of the affected Apple Watch models, Series 9 and Ultra 2, were temporarily halted on Apple’s website and retail locations in the U.S. last week. However, the watches remained available through various retailers, including Amazon, Best Buy, Costco, and Walmart.

As the legal proceedings unfold, the impact on Apple’s wearables, home, and accessory business remains a focal point. The company reported $8.28 billion in revenue from this segment during the third quarter of 2023, emphasizing the significance of resolving the patent dispute for its future product lineup.