Desktop Metal has filed a lawsuit against Markforged for allegedly copying portions of the Massachusetts-based startup’s patented metal 3D printing processes. After looking through the court documents, we found that the allegations showcase an interesting history between the two competitors.
Last year, the industry saw a massive influx of metal 3D printing innovation. This sudden charge was led by the Massachusetts-based startup Desktop Metal, which has successfully raised $277 million in funding over the past couple of years.
This metal manufacturing movement also saw contributions from the likes of Digital Metal and Markforged, the latter of which was already a household industry name for its development in continuous carbon fiber 3D printing.
Interestingly enough, right around the same time that Desktop Metal unveiled its metal 3D printing systems, Markforged also made a public shift into the very same market.
In January 2017, the continuous carbon fiber 3D printing pioneers announced the Markforged Metal X, a metal 3D printer that operates similarly to Desktop Metal’s Studio System. Meanwhile, Desktop Metal had been working on its process since it was founded in 2015, and officially debuted the Studio System and Production System in April 2017.
At the time, both Desktop Metal and Markforged were recognized as two prominent trailblazers on the new frontier of affordable metal 3D printing.
But this week, we learned some shocking revelations that seem to have pitted the two companies against one other in the courtroom.
Desktop Metal has launched a lawsuit against Markforged, alleging that the competitor and fellow Massachusetts-based business had copied portions of their patented metal 3D printing process. The official lawsuit, which was filed in the United States District Court for the District of Massachusetts, is leveled against Markforged and an ex-employee of Desktop Metal named Matiu Parangi.
We were intrigued by the case for obvious reasons, and after taking a deeper look at the court documents, discovered a riveting and longwinded history between this pair of 3D printing companies.
The Unique History Between Desktop Metal’s CEO and Markforged
In the lengthy complaint, Desktop Metal accuses Markforged of infringing on two particular patents. The first is entitled “Fabricating Multi-Part Assemblies” (U.S. Patent No. 9,815,118). This patent refers to Desktop Metal’s method for fabricating a first object from a first material, which includes a powdered material and a binder system.
The second patent is entitled “Fabricating an Interface Layer for Removable Support” (U.S. Patent No. 9,833,839). This patent refers to the support structure system developed by Desktop Metal.
In the recently filed complaint, these two patents are commonly referred to as the “Patents-in-Suit”.
Although the two competitors both unveiled its metal 3D printing technology in 2017, the origins of this story actually start in 2015, the very same year that Desktop Metal was founded by CEO Ric Fulop.
Prior to starting the company, Fulop worked as a General Partner at the venture capital fund North Bridge. According to complaint, Fulop was directly involved with the venture capital fund’s investment in Markforged.
Section 14 of the complaint states:
At North Bridge, Mr. Fulop led the software and 3D investing practices, and was an early stage investor and board member in Dyn (acquired by Oracle for $600 million), Gridco, Lytro, Markforged, Onshape, and Salsify. In the spring of 2015, Mr. Fulop began to the process of winding up his activities at North Bridge and thinking of new projects to pursue.
The court filing goes on to state that Fulop informed North Bridge and Markforged on his intention to pursue metal 3D printing, eventually leading to the founding of Desktop Metal. At that time, Markforged’s co-investor Matrix Partner expressed interest in investing in the new metal 3D printing startup, but Fulop opted to accept funding from other investors, and also stepped down from the Board of Markforged. In fact, the two companies even agreed to a review to ensure that Fulop’s plan for Desktop Metal didn’t infringe on Markedforged’s IP, and both sides agreed that it did not.
In April 2016, Desktop Metal filed the first provisional patent application that lead to the two “Patents-in-Suit”. The complaint alleges that, during this time, Markforged remained focused on its continuous carbon fiber 3D printing technology, releasing the Mark 2 3D printer in the same month.
The Hiring of Mr. Parangi: Another Unusual Connection Between Desktop Metal and Markforged
Let’s fast-forward to August 2016, the moment where this story and connection between Desktop Metal and Markforged gets really interesting. Desktop Metal had hired a man named Matiu Parangi to work as a technician on the startup’s “print farm”, which is where parts were 3D printed with prototypical machines.
Section 63 of the complaint explains the depth of sensitive information that Parangi was granted access to:
According to the complaint, in October 2016, Parangi “downloaded documents unrelated to his work on the print farm, including documents relating to Desktop Metal’s R&D strategy and proprietary technology” without the company’s knowledge.
Simultaneously, Fulop had revealed to employees that the company was about to close a financing round. Just one month later, Markforged’s counsel sent a letter to the Desktop Metal CEO to remind him “of obligations asserted to be owed to Markforged”.
Section 17 in the filed complaint reads:
On information and belief, this letter was intended to interfere with the financing of Desktop Metal. Nevertheless, the financing was successful and Mr. Fulop received no further communication from Markforged’s counsel.
In December 2016, Desktop Metal discovered that Matiu Parangi was actually the brother of Abraham Parangi, the “Digital Prophet” / Director, Technology & Creative” at Markforged. One month later, Markforged announced its Metal X 3D printer at CES 2017.
The Studio System was officially debuted by Desktop Metal in April 2017, showcasing the office-friendly 3D printer and its proprietary Separable Supports method, which enables users to remove support structures by hand. The company began shipping Studio System to customers in December 2017.
One year after announcing the Metal X at CES 2017, Markforged exhibited its new metal 3D printer at the very same trade show.
In an article written by 3DPrint.com in January 2018, Jon Reilly, Markforged’s Vice President of Product, was interview about the capabilities of the new Metal X 3D printer. He was directly quoted as stating that “the ceramic release layer sinters right off in the furnace for easy support removal,” in describing the capabilities of Markforged’s metal 3D printing technology.
Desktop Metal clearly believes that Markforged was infringing upon these “Patents-in-Suit” in order to compete with the Studio System. Section 25 of the complaint states:
As Desktop Metal begins shipping its Studio System, Markforged is seeking to compete directly with Desktop Metal by offering its Metal X 3D print system. Based on at least Markforged’s recent disclosures that its Metal X 3D print system uses a ceramic release layer that turns to powder during sintering, Markforged seeks to compete using Desktop Metal’s patented technology protected by the Patents-in-Suit.
Desktop Metal Files Lawsuit Against Markforged: What are the Allegations?
Desktop Metal has filed eight separate counts against Markforged and Mr. Parangi in the recently filed complaint. To gain a better understanding of what the company is alleging, let’s take a brief look at each count:
Count I – Infringement of ‘839 Patent
The first count accuses Markforged of infringing and continuing to infringe on Desktop Metal’s “Fabricating an Interface Layer for Removable Support” patent. This patent pertains to the unique support removal process featured in the Studio System, which uses an interface layer for easy removal.
The complaint states that Markforged has been selling the Metal X 3D printer for performing the same support removal methods Desktop Metal patented without permission.
Desktop Metal believes that this patent infringement was done knowingly, and that Markforged has caused damage and “irreparable injury” to the company.
Section 39 in the complaint states:
On information and belief, Markforged has had actual notice of the ’839 patent at least since Desktop Metal publicly announced its issuance on January 3, 2018, before Markforged exhibited its Metal X printer at CES and before Markforged granted an interview explaining its use of the methods claimed in the ’839 patent. On information and belief, Markforged’s infringement has been willful, as further evidenced by the allegations of 16 misappropriation and unfair competition set forth below. Markforged’s infringement will continue to be willful if Markforged does not discontinue its infringement.
Count II – Infringement of ‘118 Patent
This allegation pertains to the other half of the Patents-in-Suit, entitled “Fabricating Multi-Part Assemblies”. This patent refers to the process of fabricating a first object from a material that includes both powdered material and a binder system. Desktop Metal alleges that Markforged also knowingly infringed upon this patent, making the same argument displayed in Count I.
Count III – Violation of the Defend Trade Secrets of 2016
Count III is leveled against Markforged and Mr. Parangi, who Desktop Metal claims signed a Non-Disclosure Agreement (NDA) while working with the company. The plaintiff accuses Parangi of acquiring trade secrets from Desktop Metal through improper means and disclosed them, therefore violating his NDA and obligations to his employer.
This allegation is summed up nicely in Section 77 of the complaint:
As a direct and proximate result of Mr. Parangi’s and Markforged’s misappropriation of trade secrets, Desktop Metal has suffered and will continue to suffer irreparable harm and other damages, including, but not limited to, loss of value of its trade 26 secrets. Desktop Metal is therefore entitled to civil seizure of property, injunctive relief, monetary damages for its actual losses, and monetary damages for unjust enrichment where damages for its actual losses are not adequately addressed.
Count IV – Trade Secret Misappropriation
Similar to the Count III, the following allegation refers to the misappropriation of Desktop Metal’s trade secrets, and is again leveled against both Markforged and Parangi. Here, the plaintiff expounds about the economic value that Desktop Metal’s trade secrets have, and that the ex-employee stole or unlawfully took these secrets and passed them onto his brother’s company.
Count V – Unfair or Deceptive Trade Practices
Count V accuses both Markforged and Parangi engaged in unfair or deceptive trade practices through Desktop Metal’s Proprietary Information. The complaint alleges that Mr. Parangi assisted Markforged “to develop a directly competing product in the 3D metal printing field”, and that the defendant (Markforged) “knowingly received the benefits from the disclosure” of this information.
Count VI and VII – Breach of Contract (NDA)
These two counts focus strictly on Parangi, discussing the belief that the ex-employee knowingly violated the NDA, non-competition, and non-solicitation agreements that he had agreed to while working with Desktop Metal. Due to this alleged breach of contract, the plaintiff believes that Desktop Metal “has been and will continue to be irreparably harmed”. Therefore, the company believes it is entitled to injunctive relief and damages.
Count VIII – Breach of the Covenant of Good Faith and Fair Dealing
This final count is also focused on Parangi, once again covering the “breaches of his contractual obligations and his improper use and/or disclosure of Desktop Metal’s Proprietary Information”. In Section 117, the plaintiff explains:
In Conclusion: Which Way Will the Gavel Fall?
We’ve reached out to Desktop Metal and Markforged for comment, and are still awaiting a response from both parties. Of course, we will continue to update this story as more information comes to light.
In the complaint, Desktop Metal requests that the Massachusetts Court takes a number of actions in favor of them and against Markforged and Parangi. These actions include:
- A declaration in favor of Desktop Metal for each count.
- Preliminary and permanent injunction preventing Markforged from continued infringement of the two patents.
- Compensation for any current or future profits that Markforged has achieved as a result of the alleged breaches.
- An award of three times the actual damages for Markforged’s unfair trade practices.
- Civil seizure of property incorporating Desktop Metal’s trade secrets.
Until then, we can only speculate on how this strange case will play out. However, what we do for sure is that the connection between Desktop Metal and Markforged goes far beyond the two companies being located in Massachusetts and involved with metal 3D printing technology.
Stay tuned as this story develops…
A few hours after reaching out to Desktop Metal for a comment, we received a background statement from the company. Because the case is now in litigation, the company was unable to provide any further comments. Here’s the full statement released to All3DP:
Desktop Metal has filed a patent infringement lawsuit in the United States District Court for the District of Massachusetts to protect the Company’s intellectual property from unauthorized use by Markforged. The lawsuit alleges Markforged’s Metal X 3D printer violates two Desktop Metal patents related to interface layer and separable support strategies for printing 3D metal parts, as well as trade secret misappropriation.
The lawsuit is based on U.S. Patent Nos. 9,815,118 and 9,833,839 that were granted to Desktop Metal in 2017 covering the Company’s interface layer technology for both its Studio System™, the first office-friendly metal 3D printing system for rapid prototyping, and Production System™, the only 3D printing system for mass production of high resolution parts. This technology makes it possible to print support structures that do not bond to parts and consolidate during sintering, as well as assemblies that do not consolidate during sintering.
In addition to the two patents covering the interface layer and Separable Supports™ technology, Desktop Metal has a portfolio of 100+ pending patent applications covering more than 200 inventions.
Desktop Metal was founded in October 2015 by CEO Ric Fulop and a group of the world’s leading experts in advanced manufacturing, metallurgy, and robotics, including 4 MIT professors, seeking to create a new category of metal 3D printers. Mr. Fulop has a long history as a successful entrepreneur and was an early stage investor and board member for a number of 3D printing startups, including Markforged. In the summer 2015, Mr. Fulop discussed with Markforged his intent to pursue untapped opportunities in metal 3D printing, and thereafter left the board to launch Desktop Metal. At that time, Markforged was not in the metal 3D printing business.
“Metal 3D printing is an exciting, quickly growing and rapidly evolving industry and, as a pioneer in the space, Desktop Metal welcomes healthy and vibrant competition,” said Mr. Fulop. “When that competition infringes on our technology, however, we have a duty to respond. We believe Markforged products clearly utilize technology patented by Desktop Metal and we will do what is necessary to protect our IP and our Company.”
“Desktop Metal has invested significant resources in developing innovative additive manufacturing technologies for metal 3D printing and our intellectual property portfolio reflects the hard work of our engineers and scientists,” said James Coe, General Counsel of Desktop Metal. “We owe it to our customers, employees and shareholders to protect the ground-breaking nature of our technology and preserve that investment so we can continue to promote innovation.
Shortly after we received the response from Desktop Metal, a company spokesperson for Markforged also responded to our inquiry, stating that “Markforged does not discuss ongoing legal matters publicly”.
Source (Court Documents): Law360