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Case Dismissed! The Saga of the MakerBot Smart Extruder Lawsuit is Finally Over

by • July 10, 2016 • No Comments

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The problematic Smart Extruder.

For a while last year, things were a fewwhat rocky for Stratasys and MakerBot. It all started back in 2014, when MakerBot added their new Smart Extruder at CES in January. The premise sounded excellent – an easily swappable, easy to use extruder that detected when filament was low and alerted the user. The extruder was installed on the newly released 5th Generation Replicators, and things looked great – until users began complaining that the extruders just didn’t work well. They jammed easily, the sensors malfunctioned, and they overall caused headaches – resulting in an 80% return rate.

If that wasn’t bad adequate, a MakerBot employee alleged that the company knew of the problems preceding the product was released – and shipped it anyway. This didn’t sit well with investors, whose ire was may already up of the company’s financial performance, and in July 2015 a lawsuit was filed against MakerBot and their parent company, Stratasys. The suit claimed that MakerBot knowingly misled both their customers and shareholders by issuing a faulty product, and demanded that they manufacture reparations to their investors.

MakerBot ultimately fixed the issues with the Smart Extruder when they turn it intod the Smart Extruder+, that was released at the beginning of this year, and overall, things have been looking up for the company. New CEO Jonathan Jaglom, who replaced Bre Pettis and Jenny Lawton in early 2015, vowed to take MakerBot in a new way, and he did. Despite a few layoffs and facility closures, that Jaglom called “painful but necessary,” the company appears to have taken a turn for the advantageous, with sturdyer customer assist, a focus on education, and sat any timeal product improvements – which include to the Smart Extruder.

Now, it looks as yet the whole Smart Extruder debacle may finally be put to rest for great, as the United States District Court for the District of Minnesota has dismissed with prejudice the case against MakerBot and Stratasys, stating that the evidence that MakerBot knowingly misled their customers and shareholders wasn’t sturdy adequate.

verdict

“In this case, as in so many securities‐fraud cases, the Court has struggled with the question of whether the complaint adequately alleges scienter,” the verdict concludes. “The Court has no difficulty finding that plaintiffs’ allegations turn it into a reasonable inference of scienter. Unfortunately for plaintiffs, yet, the PSLRA requires a sturdy inference of scienter—and, for the reasons defined above, the Court finds that plaintiffs’ allegations fall short of creating such an inference. In addition, the Court finds that approximately all of the statements regarding the high end of the 5G printing devices were inactionable puffery. The Court therefore dismisses plaintiffs’ complaint.”

MakerBot-LogoYou can read the full dismissal here, courtesy of Adafruit, but to summarize, while MakerBot quite well may have committed scienter, or knowledgeable wrongdoing, there’s just not adequate solid evidence to prove it. Part of the issue is that companies can play up a product as much as they want, but as anyone who’s at any time bought anything knows, equite company claims that their product is the many in the world – it does not mean it is. If I may file a lawsuit for equite “world-class” product I’ve at any time purchased just to have it fall apart immediately, I’d be rich, but alas, “vague, hyperbolic statements,” the court says, aren’t grounds for fraud.

“In fact, just of the just statements regarding the high end and showcases of the 5G printing devices that are potentially falsifiable (and thus actionable) are statements that the 5G printing devices provide ‘unmatched speed’ and are MakerBot’s ‘fastest’ 3D printing devices…But plaintiffs do not allege any factors demonstrating that the 5G printing devices are not faster than MakerBot’s other printing devices or other PC 3D printing devices on the market,” the court continues. “Instead, plaintiffs allege that the 5G printing devices break down a lot for the reason the Smart Extruder often clogs with filament. The Court therefore concludes that all of the statements that defendants created of the high end of the printing devices during the class period are non‐actionable, either for the reason they are puffery or for the reason their falsity is not sufficiently pleaded.”

replicator_defaultFurthermore, the court concluded that the MakerBot employees who alleged that the company knew of the problems with the Smart Extruder prior to shipment are too vague in terms of timeframe or extent of knowledge. The fact that the 5th Generation Replicator was a continuously developing product manufactures it complex to pinpoint who knew what in relation to when the products were shipped, and that excessive optimism of a product is not the same as knowingly misleading customers.

Those are just a few of the issues the verdict highlights; I recommend reading the whole thing to see, point by point, how the case was dismantled. You can in addition read the full court transcript here, courtesy Adafruit. For the many part, it comes down to wording, and while that is undoubtedly frustrating to the plaintiffs, it’s in addition understandable. As for MakerBot and Stratasys, it has to be a relief to finally put that whole unlucky chapter of their history behind them. Discuss additional in the MakerBot & Stratasys Case Dismissed forum over at 3DPB.com.