Industrial toolmaker Kennametal (KMT.N) is facing a lawsuit in California, accused of stealing trade secrets from its former software partner, MachiningCloud. The lawsuit, which was made public on Wednesday, claims that Kennametal used the stolen information to create a competing sales platform.
MachiningCloud, based in Camarillo, California, says Kennametal owes at least $330 million in damages. The lawsuit accuses the company of misusing confidential trade secrets, breaching a contract, and failing to pay royalties for more than $1.7 billion in sales of Kennametal products.
Spokespeople for Kennametal have not yet responded to requests for comment on the matter.
In a statement, MachiningCloud argued that the case is an example of a larger company trying to take advantage of a smaller one.
The complaint details that MachiningCloud began working with Kennametal in 2011. Under the agreement, MachiningCloud developed a sales platform named Novo, which Kennametal would license. In return, MachiningCloud was to receive royalties from the sales made through the platform.
However, MachiningCloud claims it recently discovered that Kennametal had been underreporting the royalties owed since Novo launched in 2014. Additionally, the lawsuit states that Kennametal launched a similar platform of its own in 2021, which diverted sales from Novo.
Kennametal, based in Pittsburgh, Pennsylvania, reported over $2 billion in revenue last year from its sales of tools and components to industries such as aerospace and defense.
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