Shares of Markforged Holding Corporation (NYSE: MKFG) rose significantly on the charts after a crucial litigation settlement. MKFG stock surged 30.37% to conclude the trading at $2.49.
How Markforged settled the patent litigation?
Markforged came to a settlement and patent license agreement in response to a lawsuit filed by Continuous Composites Inc. alleging patent infringement. The lawsuit is now proceeding before the United States District Court for the District of Delaware. This agreement settles all claims and counterclaims related to the case.
In July 2021, Continuous Composites sued the company, claiming that Markforged had violated nineteen different patents. By April 2023, four of these claims were dismissed, leaving only four claims from a subsequently added patent. Notably, two of the remaining claims were adjudicated by a jury in April 2024.
Jury Findings and Financial Implications
One of the two patent claims asserted by Continuous Composites was found to be invalid and not infringed upon by Markforged by the jury in the trial held in April 2024. Nonetheless, the jury concluded that MKFG violated the second claim, and Continuous Composites was awarded a monetary judgment of $17.34 million as a consequence.
Through post-trial motions, the company later contested this decision on the grounds that Continuous Composites was owed more royalties for some of the items MKFG made and sold in the US after December 31, 2023.
Conditions of the Settlement Contract
In the fourth quarter of 2024, Markforged has promised to pay Continuous Composites an advance of $18 million. The company will thereafter make three more installment payments of $1 million, $2 million, and $4 million in next three years.
Cross-licensing of the parties’ patent portfolios and mutual discharge of claims relating to liabilities arising before the agreement’s effective date are both possible. Moreover, the execution of a Security Agreement, wherein Markforged (MKFG) offers Continuous Composites a security interest in its patent intellectual property rights, is a prerequisite to the settlement’s success.
