3D Printing

Class action against Stratasys and MakerBot dismissed as “mere puffery”

A class action brought against Stratasys by the company’s shareholders has been quashed in the United States Court of Appeals.

Initially brought to court in Minnesota, the case was a securities fraud action, taken in response to a line of desktop 3D printers that left shareholders feeling shortchanged.

Stratasys acquire MakerBot

In August 2013 Stratasys acquired MakerBot as an entry into the highly lucrative desktop 3D printer market.

Following this acquisition, the company’s now subsidiary released a 5G model of the MakerBot Replicator, advertised by Stratasys to be “”unmatched” in quality, reliability, ease of use, speed, and performance.”

The MakerBot Replicator 5G. Photo by Sink Hacks
The MakerBot Replicator 5G. Photo by Sink Hacks

Stratasys also “made positive statements about MakerBot’s past and future finances” as outlined by the Court of Appeals official document.

Shareholders believe the 5G was “rushed” to market

The 5G 3D printer was designed to have an interchangeable nozzle, and it was here that customers kept finding problems. The case claims,

“Stratasys knew the 5G printers were essentially inoperable but still rushed them to market while publicly proclaiming their quality and reliability.”

Printer errors and nozzle clogging resulted in costly refunds and replacements, leading to a drop in Stratasys share price.

The shareholders’ argument was that the claims made by Stratasys about the 5G 3D printer had led them to believe that their investment in the company was safe.

They state that “Stratasys knew the 5G printers were essentially inoperable but still rushed them to market while publicly proclaiming their quality and reliability.”

“mere puffery”

On July 25, 2017, the United States Court of Appeals for the Eighth Circuit dismissed the charges made by the shareholders for a second time.

Screenshot of the official decision filed by the United State Court of Appeals Eight Circuit. Image via caselaw.findlaw
Screenshot of the official decision filed by the United State Court of Appeals Eight Circuit. Image via caselaw.findlaw

The decision states that promotional claims made by Stratasys about the 5G’s performance were “mere puffery”, defined as “so vague and such obvious hyperbole that no reasonable investor would rely upon them.” Parnes v. Gateway 2000, Inc.

In another update on a separate court case, Stratasys are appealing a recent loss against Just 3D Print, the company charged with copyright infringement against a number 3D designers including Louise Driggers aka Loubie.

More information about the case was reported by 3D Printing Industry when the saga began in 2016.

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Featured image: Seal of the United States Court of Appeals for the Eighth Circuit. Image property of the United States Government.