Markforged stock drops after court ruling in patent lawsuit

A jury in Delaware has ruled against Markforged Holding Corp. in a patent litigation case filed in 2021 in federal court in the District of Delaware.

The jury's verdict, returned last week and disclosed in a press release late Friday, found that Markforged owes $17.34 million in damages to Continuous Composites Inc, a private company based in Idaho.

Markforged Inc., a wholly-owned subsidiary of the Waltham-based 3D printing company (NYSE: MKFG), said it was "exploring all available options."

"We strongly disagree with this verdict and intend to seek to overturn the verdict in post-trial motions with the District Court," Markforged said in a Friday press release.

Markforged added that Continuous Composites may seek additional relief and that "could materially impact our business and operations."

Shares of Markforged closed down approximately 14.5% on Monday, the first trading day since it issued the press release about the verdict. The company has a market capitalization of about $113 million as of Tuesday morning.

Markforged reported annual revenue of $93.8 million last year, or about five times the damages the court is ordering it to pay.

A spokesperson from Markforged declined further comment Monday. Continuous Composite did not immediately respond to multiple requests for comment.

Inside the case

Markforged manufactures and sells 3D printers and software for industrial manufacturers needing plastic, nylon and metal parts. Such parts can be reinforced with carbon fiber.

Continuous Composites filed a complaint in 2021 alleging that Markforged had infringed on four of its patents. That complaint was amended in February 2022 to include a fifth patent, No. 11,173,660, which court documents refer to as 660.

The court previously ruled that Markforged did not infringe on the initial four patents, but reached a different conclusion in the case of 660. According to the latest verdict, the jury decided that Markforged had infringed on one of 660's patent claims.

The case is centered around a three-dimensional manufacturing method called "continuous" composite printing, an alternative to other techniques such as stereo lithography and selective laser sintering.

Under this method, a primary liquid material, such as a resin, is combined with a solid strand, often carbon fiber. Both materials pass through a fixed path through a device called extruder, and the combined item that emerges is later hardened through a UV light. Supporters of this method say that the resulting parts are resistant and customizable.

Both Markforged and Continuous Composites "are well-known for their composite 3D printing solutions," according to 3D printing news site 3Dnatives, and they both employ the technique.

The news of the verdict against Markforged came about five months after the company cut approximately 10% of its employees, or just over 40 workers. In November last year, the company also received a notice of noncompliance from the New York Exchange, saying that the company's shares fell under $1 for over 30 days.

Markforged did not respond to questions related to the possible impact of the verdict on its stock price and its plans to regain compliance.