Q: What is Stratasys thankful for this Thanksgiving?
A: Patents and a large corporate legal department.
That may be a little harsh, but after the press release and filed suit against Afinia made public this week you can see that Stratasys is going to start flexing their IP muscles in this increasingly competitive market. Given that Stratasys is asking for an injunction to stop all sales of the Afinia H Series, this is a lot more than a shot across the bow. Stratasys is aggressively staking their claim to the 3D printing market.
The Afinia has been on the market since August 2012 and has done quite well during that time. They’ve won multiple awards from Make Magazine including “Best overall experience” and have been a mainstay at virtually every Maker Faire around the country. They also have signed distribution deals to start selling their printers at BestBuy.com and Staples Canada‘s online sites. They’re an increasingly strong competitor that is flexing their retail muscles thanks to their parent company’s experience in retail.
Q3 numbers for Makerbot was not as strong as some would expect in a growing market like consumer 3D Printers. Selling likely less than 5,000 printers had to raise some flags internally, which has led to a number of actions by Makerbot to try to grow their bottom line:
- A new partnership with Donor’s Choose to sell more Makerbots to schools.
- A change to the website to make Makercare opt-out (a $300+ cost) to try to increase LTV per customer.
- Opening of stores in New York City, Boston and Greenwich, Connecticut.
- This lawsuit against a major competitor.
Big partnerships and storefront bets are the kinds of big plays you can make to throw your weight around when you’re the biggest company in an industry. Lawsuits leveraging your patent portfolio also happen to be a powerful weapon, which when you aren’t capturing as much of the market as you like, become more appealing to use against stiff competition.
Given Stratasys has been a sleeping giant for a number of years, it appears they’re making it very clear they are awake and are ready for a fight.
The Stratasys Attitude
This quote from the press release really stood out to me:
“IP infringement discourages companies from investing in innovation” – Stratasys CEO David Ries.
This claim is absurd. If anything, having additional competition that you can’t shut down due to patents means you have to innovate faster; in an open market, new innovations are more prevalent as companies have to push hard to stay ahead. Brand loyalty, customer service and marketing become more important as well.
Everyone is at Risk
- August 5, 1997, U.S. Patent No 5,653,925 (the 925 patent) METHOD FOR CONTROLLED POROSITY THREE DIMENSIONAL MODELING
- February 2, 1999, U.S. Patent No. 5,866,058 (the 058 patent) METHOD FOR RAPID PROTOTYPING OF SOLID MODELS
- December 21, 1999, U.S. Patent No. 6,004,124 (the 124 patent) THIN WALL TUBE LIQUIFIER
- January 8, 2013, U.S. Patent No. 8,349,239 (the 239 patent) SEAM CONCEALMENT FOR THREE DIMENSIONAL MODELS
Most of these patents could apply to any consumer FDM 3D printing company selling a fully assembled printer and do not expire for at least 4-6 years. Stratasys went after the biggest threat that just so happened to be getting competitive distribution deals. If Afinia loses the lawsuit, it puts every other startup 3D printing company at risk of a similar suit.
The Big Picture
This is just the beginning. As CNBC has reported, over 6,800 3D printing related patents have been filed in the last decade and the rate of filing is increasing. It’s clear that Stratasys intends to enforce their patents aggressively as the CEO states:
“The entry barrier for infringers is modest, especially as technology improves and prices fall… As a result, we should anticipate that this will be a growing challenge for right holders and law enforcement.” – Stratasys CEO David Ries.
While Stratasys and 3D Systems aggressively try to capture a consumer market that doesn’t yet know why they need to get a 3D printer, I expect other low cost printers to start to capture value at the low end of the industrial market. Whether by helping make molds for sand casting or just being a low cost alternative to the more expensive printers, textbook disruption is happening. This disruption will take decades and given our current trajectory, will include quite the blood bath for both big and small companies on their balance sheets and in the court room. Yesterday’s patent suit announcement is a key point in history and another of the many likely battles in the court room between challengers and incumbents in the 3D printing market.
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