Markforged Files Claim Against Desktop Metal, Again

Fabbaloo has been provided copies of legal documents describing a new lawsuit brought by 3D printer manufacturer Markforged against their longtime rival, Desktop Metal.

After reading the lengthy 63-page legal document filed on Tuesday, July 30, there seems to be disagreement over whether the terms of a prior agreement between the parties have been breached. Markforged says yes, while Desktop Metal denies such.

To understand what’s happening you must first learn of the history between the companies.

Desktop Metal founder and CEO Ric Fulop was one of three directors of Markforged for a time when that company was launching. Subsequently, Fulop left Markforged and focused on Desktop Metal.

At the time of his departure from Markforged, that company was publicly marketing only their powerful continuous carbon fiber 3D printer. But unbeknownst to most is that they were in the midst of developing a low-temperature, office-friendly metal 3D printer eventually known as the Metal X device.

Meanwhile, Desktop Metal suddenly emerged with a low-temperature metal 3D printing system of their own, the Desktop Metal Studio.

Both of these systems use similar 3D printing processes: extrusion print using a metal-infused filament, then de-bind and sinter the printed part in a furnace to transform it to a fully dense metal part.

Desktop Metal Files Claim Against Markforged

The companies both claim to have invented their technology first. Desktop Metal claimed patent infringement by Markforged, as Desktop Metal happened to patent their system first. However, that court case was won by Markforged.

A subsequent countersuit by Markforged ended abruptly when an out-of-court deal was agreed to by the two parties. In that agreement, Desktop Metal agreed to refrain from “disparaging” Markforged and their equipment at the pain of a US$100K penalty for doing so.

Markforged Files Claim Against Desktop Metal

Now Markforged has filed a claim of disparagement against Desktop Metal.

Filed yesterday, the new claim alleges that Desktop Metal distributed “Battle Cards” to their resellers and prospective customers that contained multiple false statements regarding Markforged’s Metal X system, as compared to Desktop Metal’s Studio.

Desktop Metal Battle Cards

Evidence in the legal documents includes exaples of these “Battle Cards”, where the two systems are compared in various dimensions. Markforged says several of the statements about their system and its operation are not true. Here is one example, there’s plenty more in the full legal document:

“Desktop Metal even went so far as to claim that Markforged’s 3D printers and products are unsafe for an office environment and can start a fire because they use ‘flammable solvents’ and Desktop Metal does not—a false statement as Fulop and his fellow bad actors at Desktop Metal well know. To the contrary, Desktop Metal’s own data sheet for the solvent used by Desktop Metal reports higher flammability/combustibility characteristics than the solvent used by Markforged.”

[Side Note: I have never read a legal claim written with such dramatic flair as this one. Examples:

• “Behind Markforged’s Back”

• “Flagrant Breach”

• “Acted Like Proverbial Schoolyard Bullies”

• “Flagrant Falsehoods”

• “Treacherous And Deceitful Conduct”

• “Pure Malevolence”

• “Duplicitous Conduct”

• “Inculcated Himself Into The Very Bowels Of Markforged’s Business”

End Side Note]

Markforged lists a number of statements by Desktop Metal in the card that feels are technically incorrect, potentially causing loss of sales, investment and goodwill.

To settle the case, Markforged asks the court for a settlement based on damages “in an amount to be proven at trial”, and an award three times the actual damages, as well as costs.

In addition, Markforged desires a settlement based on the US$100K penalty agreement, saying:

“Declare that each communication, distribution or dissemination of each false and misleading statement by Desktop Metal about Markforged and its products constitutes a separate occurrence in breach of the parties’ Settlement Agreement.”

Markforged vs Desktop Metal Settlement

This would suggest that each distribution of the Battle Card would be worth US$100K. I don’t know how many were issued, but if we take Markforged’s claim that “hundreds of VARs” received the information, then we can calculate 200+ X US$100K = US$20M+. I have no idea what the loss of business could be, but for fun we could assume 200+ Metal X systems at US$100K each, leading to another US$20M+, totaling to over US$40M.

That’s a lot of cash, but given Desktop Metal’s recent investment rounds, easily affordable by the company, if the court happens to make a decision that way.

Meanwhile, in response letters contained in the evidence, Desktop Metal’s legal representatives say:

“That document [the Battle Card] was an internal draft produced in early February 2019. To our knowledge, this version of the document was not disseminated by Desktop Metal to any person outside of the Company.”

And:

“Desktop Metal does not believe that any of the statements relating to Markforged’s products are untrue based on its understanding of those products.”

I have no idea how a court will decide this case, but it will certainly be interesting to observe.