Kennametal accused of stealing software trade secrets in new lawsuit

Feb 6 (Reuters) - Industrial toolmaker Kennametal (KMT.N) allegedly stole former software partner MachiningCloud's trade secrets to build a competing sales platform, according to a lawsuit in California state court made public on Wednesday.

MachiningCloud said in its complaint that Kennametal owes at least $330 million in damages for misusing its secrets, breaking the companies' contract and failing to pay royalties for more than $1.7 billion in Kennametal's product sales.

Spokespeople for Kennametal did not immediately respond to a request for comment.

"We believe this is a simple case of a large company trying to take advantage of a smaller company," MachiningCloud said in a statement.

The lawsuit said that Camarillo, California-based MachiningCloud began working with Kennametal in 2011. According to the complaint, MachiningCloud agreed to develop a sales platform, Novo, that Pittsburgh, Pennsylvania-based Kennametal would license in exchange for a share of royalties from sales made through the software.

MachiningCloud said it learned recently that Kennametal had underreported the royalties it owed since Novo began operating in 2014. The lawsuit also said that Kennametal began operating its own "knock-off" platform in 2021 that siphoned sales from Novo.

Kennametal earned more than $2 billion in revenue from sales of its tools and components to customers in aerospace, defense, and other fields last year, according to a company report.

MachiningCloud asked the Ventura County, California court for monetary damages and an order to shut down Kennametal's platform.