Formlabs, 3D Systems in Settlement Talks over 3D Printing Patent

6/24/13Follow @curtwoodward

Formlabs, one of the most notable startups in the suddenly frenzied market for consumer 3D printers, is in settlement talks with the publicly traded company that sued it for patent infringement after a wildly successful Kickstarter campaign last winter.

There aren’t many details available about the possible settlement, and neither company would comment on the ongoing negotiations. But shedding the patent dispute—both sides hope to have a deal by September—would be a huge step for tiny Formlabs, and another sign of big changes in the 3D printing business.

Industrial designers and engineers have used the devices for decades to build prototypes out of plastics and other materials, but a new breed of startup companies has begun offering smaller, more affordable versions direct to consumers in recent years.

They’ve captured the imagination of gadget lovers and quickly drawn serious investment. Just last week, New York-based Makerbot sold to publicly traded Stratasys for more than $400 million. Another new company, Palo Alto, CA-based Pirate3D, just raised more than $1 million on Kickstarter in less than a month for its low-priced 3D printer.

Formlabs, founded by veterans of the famed MIT Media Lab, took its project to Kickstarter last fall, seeking $100,000. The Cambridge, MA-based startup raised nearly $3 million in a month, making it one of the most successful products thus far on the crowdfunding website.

But shortly after raising that money, the startup was sued by 3D Systems, an industry pioneer that sells professional and consumer 3D printers.

Formlabs has said for months that it intended to press ahead with its production of the $3,300 Form 1 printer despite the lawsuit. In mid-May, a company blog post announced the pre-sold printers were finally shipping.

The timing of that announcement was probably no accident: It came about a week after the judge in Formlabs’ patent case agreed to postpone the lawsuit until September, allowing 3D Systems and Formlabs to hammer out the details of their possible settlement. (The filing was first noticed by the Spar Point Group.)

The founder of Rock Hill, SC-based 3D Systems, Chuck Hull, actually invented the 3D printing technique used by Formlabs’ printer. That process, known as stereolithography, creates plastic objects by shining a laser into a tray holding a special liquid polymer that hardens when hit by the laser’s beam.

That’s different from the 3D printing technique often used in consumer models, in which a print head dispenses layers of plastic by melting spaghetti-like strands of raw material, kept in spools.

In press interviews, Formlabs’ founders have cited two changes that made their version of a 3D printer more affordable than the heavy-duty commercial models long used by professional engineers. On one hand, they said, the prices of lasers used in stereolithographic 3D printing have become vastly cheaper, particularly with the mass distribution of Blu-Ray video technology.

But Formlabs also contended that legal hurdles had been removed because some crucial 3D printing patents had expired.

In its lawsuit, 3D Systems pointed to a newer patent that covered improvements in the stereolithography process. Formlabs initially resisted that claim, saying 3D Systems couldn’t assert a patent claim against a product that wasn’t even in customers’ hands yet. But settlement negotiations soon followed.

(3D Systems also sued Kickstarter for its role in helping get the Formlabs printer to market. Kickstarter resisted that claim, and doesn’t appear to be directly involved in the settlement negotiations.)

Settling with 3D Systems seems like a sensible move for Formlabs. It might have to give up some licensing revenues, but the small startup was definitely outmatched when it comes to a legal arms race.

Aside from its Kickstarter backing, Formlabs has raised at least $500,000 and lists investors including Mitch Kapor, Joi Ito, Launch Capital, and Eric Schmidt’s Innovation Endeavors.

3D Systems, meanwhile, reported nearly $78 million in sales in the first quarter of this year and says it has more than 400 patents. And it’s quite familiar with long lawsuits—another 3D printer company, Dearborn, MI-based EnvisionTec, settled a 3D Systems patent infringement suit in December after seven years in litigation.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • http://www.marketsandpatents.com/ Mark Nowotarski

    This is great news for Form Labs. Settlement is always the best option.