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SUPERIOR COURT OF WASHINGTON FOR KING COUNTY
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DAVID ERAKER, an individual,
9 No.
Plaintiff,
10 COMPLAINT FOR FRAUDULENT
v. INDUCEMENT, FRAUDULENT
11 CONCEALMENT, NEGLIGENT
REDFIN CORPORATION, a Delaware CONCEALMENT, AND OTHER RELIEF
12 corporation; MADRONA VENTURE GROUP
LLC, a Washington limited liability company, JURY TRIAL REQUESTED
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Defendants.
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The Plaintiff, Mr. David Eraker (“Mr. Eraker”), alleges as follows against Defendants
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16 Redfin Corporation (“Redfin”), and Madrona Venture Group LLC (“Madrona”) (collectively
17 “Defendants”):
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19 22. Around the time of the July bridge loan, Mr. Eraker presented the iCovet idea to Mr.
20 Goodrich (with Mr. King’s permission) and strongly advocated licensing the idea from Mr. King.
21 23. As Madrona’s due diligence extended into July and August 2005, and after Mr.
22 Eraker shared the iCovet idea with Mr. Goodrich, Mr. Goodrich began discussing an idea for a
23 patent based on an idea that he informally called “First to Know.” At the time, i.e., July and August
24 2005, Mr. Goodrich claimed that the so-called First to Know idea was original to him.
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2 45. Mr. Eraker’s subsequent role at Redfin placed him in charge of product
3 development, including filing patents and managing the IP portfolio. Occasionally, First to Know
4 would be discussed as a possible idea, and Mr. Eraker would point out the obvious legal roadblocks,
5 such as Redfin’s non-disclosure agreement with Mr. King and the attendant need to license the idea
6 from Mr. King.
7 46. Before Mr. Eraker left Redfin, no one informed him that Mr. Goodrich’s provisional
8 application for First to Know contained Redfin’s intellectual property and Mr. King’s iCovet
9 business method as modified by Mr. Eraker for real estate. Redfin concealed this information from
10 Mr. Eraker through a pattern of coordinated conduct involving several individuals, including Mr.
11 Kelman, to prevent Mr. Eraker from learning about the illicit patent filing. For example, the First
12 to Know provisional patent application was not included in the schedule of exceptions for the Series
13 B round of investment. As another example, Mr. Kelman took direct control of managing Redfin’s
14 IP portfolio, and at least one time conducted a patent review meeting discussing First to Know when
15 Mr. Eraker was out of the office.
16 47. Additionally, in email correspondence between Mr. Eraker and Mr. Goodrich in
17 November 2005, Mr. Goodrich stated that he had ceased negotiations with Mr. King, indicating
18 that Redfin was not interested in pursuing a business that implemented the iCovet intellectual
19 property. Meanwhile, Mr. Goodrich was secretly exploring options with others at Redfin to learn
20 how Redfin could offer a First to Know service as described in his secret provisional patent filing
21 despite “what remaining legal issues need to be addressed & at what cost.”
22 48. Neither Mr. Goodrich nor Redfin obtained a license from Mr. King for iCovet.
23 49. Mr. Eraker’s role and influence at Redfin was further marginalized after the Series
24 B round as a result of additional investors and the new Madrona investment structure.
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10 52. Mr. Eraker does not review other inventor’s patents, particularly those held by
11 competitive companies, as a matter of practice in order to protect himself from enhanced liability.
12 53. Mr. Kelman and Mr. Eraker exchanged emails in the summer of 2016 regarding a
13 Bloomberg article about Redfin’s founding and business practices. During the exchange, Mr.
14 Kelman made statements regarding Mr. Goodrich that put Mr. Eraker on notice and he began
15 reviewing Redfin’s patent filings.
16 54. In doing so, Mr. Eraker discovered two remarkably similar patent filings: Mr. King’s
17 iCovet patent and Mr. Goodrich’s First to Know patent application, U.S. Patent Application No.
18 11/508,748, Publication No. 2007/0043770 A1.
19 55. Mr. Eraker was floored when he realized Mr. Goodrich had filed a First to Know
20 patent application with content Mr. Goodrich had explicitly stated would not be included, namely
21 content and technology enabling potential buyers to make offers on homes that were not listed. Mr.
22 Eraker was further shocked to learn that he was not named as an inventor on this application, despite
23 having drafted the original specification and despite having conceived of Redfin’s previously filed
24 location-based search and home-pricing ideas. Even more shocking to Mr. Eraker was the fact that
25 Mr. King, who originated the foundational idea known as iCovet, was not named as an inventor.
21 61. Mr. Goodrich concealed this misconduct from Mr. Eraker because Mr. Goodrich
22 knew Mr. Eraker would have never agreed to a Series A investment from Madrona, or given up his
23 control of Redfin if he knew that Mr. Goodrich had filed a provisional patent application in the
24 intellectual property domain of Mr. King’s and Redfin’s patents with information Mr. Goodrich
25 had obtained through due diligence.
12 C. Such other and further relief as the Court deems just and proper.
18 s/ Steven W. Fogg
Steven W. Fogg, WSBA No. 23528
19 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
20 Phone: (206) 625-8600
sfogg@corrcronin.com
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