Markforged Ordered to Pay $17M to Continuous Composites for Patent Infringement

In a decision on April 15, 2024, the District Court of Delaware ruled in favor of carbon fiber 3D printing firm Continuous Composites, in its patent infringement lawsuit against Markforged (NYSE: MKFG). A federal jury unanimously concluded that Markforged had infringed upon Continuous Composites’ patents with its continuous fiber 3D printers, specifically U.S. Patent 11,173,660. Markforged was ordered to pay $17 million in damages for past sales of these printers from November 2021 through December 2023.

“We are thankful for the jury’s diligence in recognizing Markforged’s infringement and our prior rights to Continuous Composites’ foundational patents. It confirms the value of our technology that the team has been working hard on since 2012, and we are committed to protecting our patents from those who wrongfully use them,” stated Steve Starner, who took over as CEO of Continuous Composites in January 2024. Starner previously served as Vice President of Sales for North America at metal 3D printing firm Velo3D for over a year-and-a-half. Before that, he spent over 14 years at software giant Hexagon.

In contrast, Markforged reacted to the court’s decision with plans to challenge the verdict. The Massachusetts-based company is considering post-trial motions and appeals to overturn the decision. While substantial, it’s worth noting that the jury found a second patent claim Continuous Composites asserted to be invalid and not infringed. This comes after other patent claims in the case were already dismissed in prior decisions.

The news comes at a challenging time for the company, as total equity for Markforged dropped from $252 million to $161 million year-on-year, according to its 2023 financial report. Moreover, its operating cash flow was negative $48.9 million for the trailing twelve months, which was better than the prior year’s negative $73.5 million. The awarded damages alone represent approximately 6.9% of the company’s total assets as of the end of the last fiscal year. The potential ongoing royalties from 2024 to 2033 that Continuous Composites will seek in post-trial proceedings could potentially exacerbate this.

A ruggedized Markforged 3D printer deployed for military applications. Image courtesy of Markforged.

Altogether, the legal battle is an expensive and time-consuming one for Markforged who, like most of the other publicly traded additive manufacturing firms, is attempting to weather the storm of a dampened financial climate. Any hit for such a small business can be a difficult one so that, while it is among the more successful 3D printing companies overall, now is the worst time to experience something like a $17 million loss.

Both companies are partnered with the U.S. Department of Defense in various ways, with Markforged in particular becoming increasingly vital for 3D printing near or in the field of war. For that reason, it seems like a matter of national security that Markforged continues to survive in some form. What that form takes, exactly, is another matter. This could mean a potential merger with another company, such as Formlabs, if Markforged founder Greg Mark had a say.