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Since 3D Systems (NYSE: DDD ) first pioneered the process of laying down successive layers of material that are then cured or hardened into a functional three-dimensional object, 3-D printing has held incredible promise to transform the way goods are manufactured and resources are consumed. Like any disruptive technology, it also has some worrying ramifications. Just as the nation ponders stricter gun control, one group has used commercial 3-D printers to create a working AR-15, the same weapon used in the tragic Sandy Hook school shooting. What is the responsibility of 3-D printing companies to police this sort of behavior?
The group Defense Distributed, which is led by director Cody Wilson and dedicated to the open-source home manufacture of firearms, originally attempted to use a Stratasys (NASDAQ: SSYS ) desktop printer to create a handgun. Upon learning of the plan, Stratasys revoked Wilson's license and repossessed the printer, citing the Undetectable Firearms Act, a law banning weapons made with plastic parts that would evade metal detectors. Wilson disputed that his project was illegal, and he may be right. There are no laws that specifically and intentionally address 3-D printing, so the issue falls into a legal grey area.
Wilson and his group apparently gained access to a 3-D printer elsewhere, however: In early December, Defense Distributed posted a video of an AR-15 assault rifle firing several rounds. The semiautomatic weapon was assembled partially from 3-D-printed plastic components and partially from off-the-shelf metal pieces, and it successfully fired several rounds in quick succession.
Granted, the weapon broke down after only six shots because of the heat and force generated by firing. However, this should be seen as a failure of the group's budget, not of the technology's capability: General Electric's (NYSE: GE ) Aviation unit has a small 3-D printing operation that it uses to produce components capable of withstanding the heat and force of a jet engine.
This raises puzzling questions for 3-D print companies like Stratasys and 3D Systems. Stratasys took it upon itself to prevent its customers from using its technology in a manner it felt was illegal, but will the company be required by regulation to do so in the future?
By all accounts, Defense Distributed and Cody Wilson are law-abiding figures who simply have a keen interest in creating firearms. Far from trying to hide their intentions, they widely publicized their vision for printed weapons, even pre-emptively going to the Bureau of Alcohol, Tobacco, and Firearms. What if the next person who prints an assault rifle isn't such a stand-up guy? Do 3D Systems and Stratasys need to police their customers?
There isn't really precedent for this kind of thing. The closest case I can find is A&M Records vs. Napster. In that case, file-sharing website Napster was found to be not breaking any laws itself, while it was the service's users who were violating copyright by illegally downloading music. The Ninth Circuit ruled that since Napster knew that some of its users were breaking the law, and since it had the ability to prevent them from doing so, it therefore had the obligation to ensure the law was upheld. To comply with the injunction, Napster developed a system that was 99.4% effective in preventing illegal file sharing on its technology platform. The judge ruled that only 100% compliance was acceptable, and Napster was forced to shut down entirely.
If Stratasys and 3D Systems are similarly held 100% accountable for preventing abuse of their technology platforms, the companies would probably not be able to survive the compliance. Without a regulatory framework in place limiting the liability of the 3-D print companies, this remains an industry that could be undone by an unfriendly court ruling.
While risks loom large for 3D printers, the potential of these innovators is just as great. To help investors decide whether the future of additive manufacturing is bright enough to justify the lofty price tag on the company's shares, The Motley Fool has compiled a premium research report on whether 3D Systems is a buy right now. In our report, we take a close look at 3D Systems' opportunities, risks, and critical factors for growth. You'll also find reasons to buy or sell, and receive a full year of analyst updates with the report. To start reading, simply click here now for instant access.