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Markforged Holding (NYSE: MKFG) announced a jury verdict in a patent case against Continuous Composites Inc., resulting in a $17.34 million verdict against Markforged, Inc. The jury found one patent claim invalid but ruled in favor of Continuous Composites on another claim. Markforged plans to challenge the verdict through post-trial motions and appeals.
The recent jury verdict in the ongoing patent lawsuit between Markforged and Continuous Composites holds substantial implications for Markforged’s financial and operational future. The award of $17.34 million in damages is a significant sum, which may spur a negative reaction in the stock market, reflecting concerns over potential hits to the company’s earnings and cash flow. Given the company’s indication of a strong balance sheet, they may be capable of absorbing the immediate financial impact without jeopardizing short-term operations.
However, the prospect of post-trial motions for royalties on future revenue is particularly concerning for long-term forecasting. Such additional costs could disrupt the company’s pricing strategy, competitiveness and profitability. Furthermore, if Markforged’s appeal process extends over a long period, legal expenses could mount, alongside the potential for accruing interest on unpaid damages, affecting future financial results.
The company’s intent to seek to overturn the verdict suggests a protracted legal battle that could generate uncertainty among investors and customers. Additionally, the invalidation and non-infringement finding on one of the patent claims provides some legal leverage, albeit limited, which the company can capitalize on during their planned appeal.
An immediate financial assessment after such a jury verdict would scrutinize the solidity of Markforged’s balance sheet. The claimed effective cost controls and innovation in product lines could be pivotal in mitigating the verdict’s impact. Investors will look for reassurances that the company can sustain its R&D investments and market competitiveness in the wake of this financial setback.
The impact on stock prices may reflect investor sentiment on the company’s ability to handle the litigation outcome and potential future royalties. Key financial ratios, including the current ratio and debt-to-equity, as well as cash reserves, will be scrutinized to assess the company’s short-term liquidity and long-term solvency.
Lastly, this litigation result may prompt investors to weigh the intangible impacts, such as reputational harm and its effect on customer trust and market share. The company’s response strategy and communication effectiveness in the following days will be critical to counteract potential negative market reactions.
This legal development could serve as an indicator of the broader risks associated with intellectual property (IP) in technology and manufacturing sectors. Market observers may take this opportunity to re-evaluate the IP risk profiles for other companies in the sector, potentially adjusting their market projections and investment recommendations.
Moreover, Markforged’s experience may catalyze a shift in how companies approach patent strategy, potentially increasing investment in patent portfolio development and defensive tactics. The verdict may also influence partnership dynamics within the industry, with companies becoming more cautious in their collaborations to avoid similar legal entanglements.
The perceived strength of Markforged’s new product line also suggests resilience and potential for recovery. Should the innovation surpass existing market offerings, the company may offset the negative impact of this verdict through increased market share and customer loyalty. The long-term effect will heavily depend on the company’s ability to continue innovating and outpacing competitive pressures while managing the legal challenges.
WALTHAM, Mass.–(BUSINESS WIRE)– Markforged Holding Corporation (NYSE: MKFG) (the “Company”), the company strengthening manufacturing resiliency by enabling industrial production at the point of need, today announced that on April 11, 2024, the jury in the U.S. District Court for the District of Delaware reached a verdict in the Company’s ongoing patent lawsuit with Continuous Composites Inc. (“Continuous Composites”).
The jury returned a verdict against Markforged, Inc., a wholly-owned subsidiary of the Company, in the amount of $17.34 million. As previously disclosed, in July 2021, Continuous Composites, a company based out of Idaho, filed a patent-infringement lawsuit against the Company. The jury found one of the two patent claims Continuous Composites asserted at trial against the Company to be invalid and not infringed. However, the jury found that the Company had infringed the other patent claim and awarded monetary damages. While the Company cannot predict what additional action Continuous Composites may take, it is possible that they may seek additional relief through post-trial motions for royalty payments on future revenue, which could materially impact the Company’s business and operations.
The Company strongly disagrees with this verdict and intends to seek to overturn the verdict in post-trial motions with the District Court. The Company is exploring all available options, including seeking to overturn the verdict and any resulting judgment through the appeals process.
While the Company is currently assessing the verdict’s impact on its business, given its strong balance sheet, effective cost controls and new, innovative product line, the Company remains focused and excited about the future of the Company and its ability to continue to drive the adoption of additive manufacturing on the factory floor.
Special Note Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on beliefs and assumptions and on information currently available. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “strategy,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “opportunity” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although Markforged believes that it has a reasonable basis for each forward-looking statement contained in this press release, Markforged cautions you that these statements are based on a combination of facts and factors currently known by it and its projections of the future, about which it cannot be certain. Forward-looking statements in this press release include, but are not limited to, statements regarding the Company’s expectations concerning any impact to the Company’s business, balance sheet and cost structure; any potential post-trial motions and appeal; the Company’s disagreement with the verdict; and the Company’s intention to challenge the judgment. The forward-looking statements contained in this report are subject to risks and uncertainties, which may cause the actual outcomes or results to vary from those indicated by the forward-looking statements. These risks and uncertainties include any adverse outcomes of any motions or appeals against us, and other risks and uncertainties, including those more fully described in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2023, and other factors detailed from time to time in the Company’s filings with the SEC. The Company undertakes no obligation to revise or update publicly any forward-looking statements.
About Markforged
Markforged (NYSE:MKFG) is enabling more resilient and flexible supply chains by bringing industrial 3D printing right to the factory floor. Our additive manufacturing platform The Digital Forge allows manufacturers to create strong, accurate parts in both metal and advanced composites. With over 10,000 customers in 70+ countries, we’re bringing on-demand industrial production to the point of need. We are headquartered in Waltham, Mass where we design the hardware, software and advanced materials that makes The Digital Forge reliable and easy to use. To learn more, visit www.markforged.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240412788991/en/
Markforged:
Media
Sam Manning, Public Relations Manager
Investors
Austin Bohlig, Director of Investor Relations
Source: Markforged Holding Corporation
The ticker symbol for Markforged Holding is MKFG.
The jury reached a verdict on April 11, 2024, in the U.S. District Court for the District of Delaware.
The verdict against Markforged, Inc. was $17.34 million.
Markforged intends to challenge the verdict through post-trial motions and appeals.
Markforged is currently assessing the verdict’s impact on its business, considering its strong balance sheet, effective cost controls, and new product line.
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About MKFG
at markforged, we are on a mission to unlock the next 10x innovation in design and manufacturing. we build an industrial 3d printing platform to liberate designers and engineers from decades-old, slow part creation processes. nasa, google, ford, amazon, siemens and thousands of companies in 50 countries use markforged to print same-day prototypes and produce stronger end-use parts than they did before. with markforged, customers are able to ship 50x faster, spend 20x less, and build products that are 23x stronger. the markforged platform includes a full ecosystem of 3d printers for metal, composite, and plastic parts; purpose-built metal & carbon-reinforced materials for strength and beautiful finishes; and cloud software for turning drawings into high-strength printing. for more information visit us at www.markforged.com
