A US District Court is considering whether to allow litigation to proceed in Fortis Advisors LLC’s lawsuit against Stratasys. The lawsuit alleges that the Israeli 3D printing firm is seeking to delay legal proceedings, arguing that arbitration should first resolve the dispute outside of court.
Fortis, the San Diego-based investment advisory firm representing the former shareholders of Origin Laboratories, Inc., filed the suit in October 2024 in California state court. It accuses Stratasys of withholding $40 million in earn-out payments from its $100 million acquisition of Origin. According to the lawsuit, the DLP technology startup’s shareholders allege Stratasys delayed product launches, misrepresented the timing of the earn-out period, and excluded key revenue streams to avoid paying the agreed-upon amount.
Stratasys, led by CEO and co-defendant Yoav Zeif, has requested a stay on the lawsuit, arguing that the Federal Arbitration Act (FAA) requires arbitration to resolve overlapping factual issues. The 3D printer manufacturer had previously contested arbitration for certain claims. However, after a Delaware Chancery Court ruled against these efforts last July, it is now pushing for arbitration to take precedence. While Stratasys acknowledges that some claims should be decided by the court, it argues that they depend on issues to be decided in arbitration before the International Centre for Dispute Resolution (ICDR), where a hearing is scheduled for July.
The plaintiff opposes this, accusing Stratasys of what it calls “procedural brinksmanship” and “gamesmanship” to delay the litigation process. Fortis argues that the fraud claims should be litigated separately in court and alleges that the Israeli 3D printer manufacturer is attempting to “avoid a merits-based adjudication of the non-arbitrable claims at any cost.”
The US District Court for the Northern District of California is evaluating whether to allow the litigation to proceed or to compel arbitration. According to court filings, an update and response to the claims is expected later this month.
Origin and Stratasys’ clash over earn-out payments
The legal dispute has its roots in a December 2020 announcement when Stratasys agreed to acquire Origin in a deal valued at up to $100 million in cash and stock.
At the time, both parties had an amicable relationship. During a Stratasys earnings call at the time of the purchase, Origin’s Founder and then-CEO, Christopher Prucha, commented that the combination would allow the resin 3D printing startup to “achieve our vision, and a way of getting that global install base.” He added, “We had various options, but we decided that joining Stratasys was by far the best outcome, not only for Origin but for our partners and customers as well.” However, this enthusiasm has since faltered. Prucha and fellow Co-founder Joel Ong ended their association with the Stratasys-led Origin operation in 2023.
As part of the merger agreement, $40 million was allocated as “earn-out” payments, tied to the sales of products and services using Origin’s intellectual property. The initial earn-out calculation was tentatively set to begin on July 1, 2021.
According to the lawsuit, Fortis claims that Stratasys deliberately delayed the launch of Origin’s products to push sales outside the earn-out period. Court documents allege Stratasys assured shareholders verbally and in writing that their payments would be based on actual sales and that the earn-out date would be adjusted accordingly.
After launching its Origin 3D printing products, including the Origin One Dental in February 2022, according to the lawsuit, Stratasys later stated that the earn-out period had already begun on July 1, 2021, contrary to prior assurances. The defendants are also accused of improperly excluding significant revenue streams from the earn-out calculations, particularly sales of products that incorporated Origin’s intellectual property but did not carry the Origin brand name. As a result, most sales were disqualified from the earn-out, resulting in the $40 million earn-out payments not being made—a move Fortis has denounced as a “fraudulent scheme.”
The legal battle so far
In May 2023, Fortis initiated arbitration under the ICDR, claiming Stratasys withheld the $40 million earn-out payments by manipulating sales timelines. In response, Stratasys filed a lawsuit in July 2023 against individual shareholders Prucha, Ong, and Jeffrey Lee in the Delaware Court of Chancery. This sought to block the arbitration and argue that some claims should be litigated.
The Court initially granted Stratasys a Temporary Restraining Order (TRO). This halted the arbitration until the following year when Stratasys’ requests were rejected, and the company was ordered to pay Fortis $340,618.09 in legal fees.
Following this, Stratasys submitted a new motion arguing that the arbitration should be dismissed, and the claims litigated in court. Fortis responded in October 2021 by withdrawing the fraud and equity claims from arbitration and filing a lawsuit in San Francisco Superior Court, which was later removed to the US District Court. As 2024 came to a close, Stratasys sought to pause the court case until arbitration was completed. The ICDR arbitration hearing has been set for July 2025.
Fortis has urged the court to deny Stratasys’ motion to pause the litigation, arguing in its filings that the court should ‘not reward Defendants’ “gamesmanship.” The plaintiff has also called on Stratasys to respond to the lawsuit and is seeking reimbursement of attorneys’ fees and litigation costs.
3D printing lawsuits
Over the past year, several legal battles have emerged within the additive manufacturing industry. Indeed, this is not the first time Stratasys has been active in the courts. Last year, the company filed two patent infringement lawsuits against Bambu Lab, the Chinese desktop 3D printing leader.
The suits alleged that Bambu infringed on ten of its 3D printing patents relating to common features like purge towers, heated build platforms, tool head force detection, and networking capabilities. Targeting models like the X1C, X1E, P1S, P1P, A1, and A1 Mini, Stratasys has requested a jury trial along with damages and an injunction to block further 3D printer sales. This case has drawn notable criticism from the open-source community.
Elsewhere, electronics 3D printer manufacturer Nano Dimension has been sued by Desktop Metal. The metal binder jet specialist alleges that the Israeli firm has failed to use “reasonable best efforts” to secure timely regulatory approval for their $183 million merger agreement. Filed in the Delaware Court of Chancery, Desktop Metal requested Nano cooperate with the Committee on Foreign Investment in the United States (CFIUS) to finalize a mitigation agreement and complete the transaction.
Following this, the plaintiff filed a second lawsuit against Nano Dimension, naming Markforged as a new defendant in the legal battle. This suit alleges that Nano’s planned $115 million acquisition of Markforged violated its agreement with Desktop Metal. The Delaware Court also granted the motion for an expedited trial in the first suit, scheduled for the week of February 24, 2025.
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Featured image shows the Stratasys booth at Formnext 2024. Photo by 3D Printing Industry.
