Two days before its initial public offering, Redfin disclosed in an updated regulatory filing today that its co-founder and former CEO is threatening litigation against the company over one of its pending patent applications.
The letter was received from a lawyer for David Eraker on Monday of this week, according to Redfin’s updated S-1 filing:
On July 24, 2017, we received a letter from counsel to David Eraker, one of Redfin’s founders and our former CEO. The letter asserts a variety of claims against us, Paul Goodrich, a director, and Madrona Venture Group, an investor, related to events prior to Mr. Eraker’s departure from Redfin in August 2006. Mr. Eraker released all claims against Redfin in connection with his departure. The letter focuses on allegations about the inventorship of one of Redfin’s patent applications that has not issued and does not cover our current products or services. The letter threatens litigation, but no complaint has been filed. We believe these claims have no merit. We will defend ourselves vigorously if Mr. Eraker sues us. However, litigation is uncertain and expensive, and any judgment or settlement could harm our business.
The specific patent application is not identified in the filing. We’ve contacted Redfin and Eraker for comment. Madrona declined to comment.
Eraker, who co-founded Redfin in 2004, is now the co-founder and CEO of real estate brokerage Surefield, focused on home sellers. Redfin previously settled a separate lawsuit, a stock-related dispute, with one of his other co-founders, Michael Dougherty, as well as former Redfin CTO David Selinger.
Eraker is named on a number of Redfin’s issued patents, covering a variety of online real estate technologies.
Seattle-based Redfin, which describes itself as a “technology-powered residential real estate brokerage,” plans to go public on Friday, aiming sell 9.23 million shares in the $12 to $14 per share range. Nasdaq pegs the total offering amount at $148.6 million. It will be the Seattle region’s first tech IPO of 2017.