The internet has become the home to many advances in the world. With one click of a button, a person can communicate with another person located on the other side of the world. With another click of a button, a person can buy a shirt and have it delivered right to his/her doorstep in a matter of days. Not only has the internet made things more convenient, it has become a tool in starting a business. Besides finding a tutorial to create a website, inventors can now fund their projects to bring their ideas to reality through crowdfunding. The inventor simply places his idea on a crowdfunding website, e.g., Kickstarter or Indiegogo, and sends the link to a large group. Depending on the invention’s popularity, the entrepreneur can raise a high amount of money with little effort.
Crowdfunding is starting to become a viable source of funding for startups. According to Forbes, crowdfunding is predicted to overcome venture capitalists next year. Although, crowdfunding has made it easier to create a business, it does not come without legal problems. One of the biggest issues is intellectual property. From patent trolls, to patent infringement, crowdfunding websites have found themselves under attack by businesses.
In late 2012, 3D Systems brought a patent infringement lawsuit against Formlabs. 3D Systems alleged both direct and indirect patent infringement for its three-dimensional printing technology. This lawsuit came after Formlabs collected over $2 million from its crowdfunding campaign to put its three-dimensional printer into production. Formlabs was planning on selling the printer for less than 3D Systems’ printer, leading to the filing of the complaint. No answer was ever filed in the original suit, but a series of time extensions indicated that the companies were looking for a settlement. In late 2013, a notice of voluntary dismissal was filed and a settlement looked imminent.
However, one year later, 3D Systems filed another patent infringement lawsuit against Formlabs in another district. Rather than claiming patent infringement on one patent, 3D Systems was claiming patent infringement for eight patents. This time, Formlabs requested an extension of time to answer the complaint.
The two companies conducted negotiations outside of the courtroom, and in late 2014, the court ordered a dismissal of the lawsuit with prejudice. The case dismissal indicated that the two companies had reached a settlement. At the time the dismissal was known to the public, there was no disclosure of their settlement terms. However, several days later, the details of the settlement were leaked to the public. The highlight of the settlement was that 3D Systems would collect an 8% royalty from all of the Formlabs sales.
Although, Formlabs was a small startup funded through crowdfunding, it has become a constant player of the three-dimensional printing industry, i.e., large enough to be considered as a threat to its competitors.
At our law firm, we assist clients with legal issues related to business, trade secret protection, and intellectual property issues. You may contact us to set up an initial consultation.