Attorneys for adhesive manufacturing giant 3M Co. now allege that two products sold by San Antonio-based tech company Xpel Technologies Corp. are infringing on a patent awarded to the St. Paul Minnesota-based company two years ago, according to a recently amended lawsuit winding its way through the District Court of Minnesota.
3M (NYSE: MMM) and Xpel Technologies (Nasdaq: XPLT) have been selling competing product lines for a clear automobile paint protection film on the market for years.
But in 2014, 3M was awarded a patent from the U.S. Patent and Trademark Office for multilayer polyurethane protective films. The company alleges that both Xpel’s Ultimate and Stealth films sold by the local company infringe on 3M’s patent.
Particularly, 3M alleges that Xpel’s film has a polyester-polyurethane top coat and other layers of plastic then adhesive so it sticks to the vehicle like a second skin.
Xpel’s attorneys countered that the top layer of its film is not polyester-polyurethane for either of the products sold, according to court documents.
Xpel’s website describes its Ultimate paint protection film as a “virtually invisible urethane film” and the Sleath product as a satin paint finish of that same polyurethane film. The local company sells several different products, including window film that appears to use the base plastic coating in all of them.
The plastic coating products appear to account for most of Xpel’s revenue as a business.
This summer, Xpel CEO Ryan Pape told investors that the company worked on previously planned enhancements to its paint protection films that required “certain production process changes” and occurred during second quarter this year, but that they weren’t connect to the lawsuit.
Pape said one of the company’s raw material suppliers had quality issues with its product, which strained product availability and had an impact on sales.
During second quarter, Xpel raked in more than $765,700 in net income from $13.7 million in revenue. Xpel has spent roughly $300,000 battling 3M‘s lawsuit since it was filed in December 2015.
“The challanges we had with the product and the changes with the product have absolutely nothing to do with the 3M lawsuit. We do not have any plans to change anything about our products because of the lawsuit,” Pape said.