After four months of stalemate, full-scale legal battling has broken out between Martin Marietta Corp. and the Intelsat consortium over who will pay for the bungled launch of a $157 million communications satellite in March.

Bethesda-based Martin Marietta on Friday sued Intelsat in U.S. District Court in Baltimore, asking for a judgment that it is not liable.

Martin Marietta said that if it has to pay, it may withdraw from the commercial space launch business altogether.

According to the suit, Intelsat on July 3 demanded that Martin Marietta pay damages for the launch or face a suit. Martin Marietta has now beaten Intelsat to the punch, with a two-count suit that accuses Intelsat of making "unlawfully coercive demands."

"The contract terms provided that Intelsat clearly had the financial risk," said Martin Marietta spokesman Phillip Giaramita. " ... That's really the heart of the matter." Intelsat last night declined to comment on the suit. However, almost from the moment the launch failed, lawyers at its D.C. headquarters have been studying actions they might take in court to recover some of the losses.

In 1987, Martin Marietta signed a $112 million contract to launch the satellite using a Titan booster (Intelsat paid separately for the satellite). Satellite operators like Intelsat often take out commercial insurance against a failure, but Intelsat did not, opting instead to set aside funds of its own to cover that contingency.

The rocket lifted off routinely from Cape Canaveral on March 14, but once in space it failed to separate from the satellite, stranding it in a low, useless orbit. Intelsat is now negotiating with the National Aeronautics and Space Administration to have space shuttle astronauts attach a rocket to the satellite that would send it up to its proper orbit. That mission would cost Intelsat about $90 million.

Martin Marietta has blamed the failure on faulty electrical engineering in its Titan booster, but contends that its financial responsibilities ended at liftoff. According to the suit, the contract allowed Intelsat to request a replacement launch at a stipulated price if the first one failed and it has not done so.

Intelsat, however, is expected to argue that Martin Marietta was grossly negligent in conducting the launch and therefore should pay damages.

Of the three U.S. companies that have entered the market for commercial space launches, Martin Marietta has had the roughest time. The suit yesterday said that losing the suit "may make its services noncompetitive or cause Martin Marietta to terminate its commercial launch services business."