A cofounder of online brokerage Redfin sued the company this week, arguing in a pair of lawsuits that it has violated his patents for years and ultimately cost him millions of dollars.
David Eraker
David Eraker filed one of the suits in federal court Monday. It states that after founding Redfin, Eraker left and later formed Surefield, an online brokerage that pioneered 3D tour technology. Eraker believes Redfin, along with partner Matterport, copied that technology despite Eraker and his company patenting it.
A second suit — filed in Washington state court — alleges that Redfin, along with investor Madrona Venture Group, misappropriated map-based search technology that Eraker invented while still at Redfin.
Both suits ask for unspecified monetary damages. The federal case, which was technically filed by Eraker’s company, also asks that Redfin be barred from using technology based on Eraker’s patents.
The two cases have their origins in events that happened years ago. They begin by explaining how Eraker founded Redfin in 2002, and was later joined by Michael Dougherty and David Selinger. Within two years of its founding, court documents state, Redfin was “the first and only company to” combine an array of data types, including from satellite imagery, county assessors’ offices, multiple listing services and more.
Redfin was able to do all of this, according to court documents, thanks to the technology Eraker developed while at the company. The suits additionally mention a number of patents from that period that bear Eraker’s name.
However, as Redfin was preparing for its Series A funding round in 2005, Madrona managing director Paul Goodrich allegedly discovered technology that Eraker had developed while at Redfin. The state lawsuit alleges that Goodrich then filed a provisional patent for that technology, but concealed the patent from Eraker.
Finally, Goodrich assigned the patent to Redfin “only after Mr. Eraker had been ousted from the company,” according to the court documents.
The end result was “fraudulent behavior” that “resulted in Mr. Eraker losing millions of dollars of equity,” according to the suit.
The federal lawsuit hinges on events that happened following Eraker’s ouster from Redfin in 2006. After several years, Eraker founded Surefield in 2012. Court documents claim that Surefield was “the first company to offer commercial image-based rendering for the creation of online 3D home tours that combined photorealism and spatial navigation amongst other features.”
Such features have become common in the real estate industry today, and are currently experiencing something of a moment with in-person home tours largely banned thanks to the coronavirus pandemic.
Surefield’s version of the technology launched in 2014 and “enabled both spatial navigation and photorealism in the same user interface,” the court documents state. Additionally, Surefield holds a number of patents related to the tour technology, and those patents name Eraker as an inventor.
However, Eraker’s suit claims that despite those patents, Redfin and Matterport launched their own version of the concept shortly after Surefield did. And Eraker believes that version ripped off his technology.
“The visual presentation and underlying technology were copied from Surefield’s first-to-market service,” the lawsuit states.
The suit later adds that “not only is the Redfin-Matterport image-based 3D rendering service similar in appearance to Surefield’s, but there is evidence that this service utilizes a strikingly similar technical implementation to the one first disclosed and used by Surefield, which is further indicative that it was copied from Surefield’s first-to-market service.”
In an email, Eraker told Inman that “when Redfin copied Surefield’s 3D models, it hampered our growth, ability to raise money, and almost killed us off.” The company survived, Eraker said, thanks to revenue it generated from home sales.
Asked if he had a sense of how much money he believes patent infringement has cost him, Eraker said that it is “tough to say.” But he added that Redfin is “is worth 2.5 billion today” and other companies such as Zillow and Compass — which adopted map search features later — have even higher valuations.
“So these are big numbers, but I’d say Redfin and its shareholders have suffered the most,” he added.
Madrona declined to comment for this story. Redfin also declined, saying that it doesn’t comment on pending litigation.
Matterport (which is not named as a defendant in the suits) did not immediately provide Inman with comment on the cases.
However, the suits are probably not a complete surprise for Redfin; nearly three years ago, on the eve of the company’s initial public stock offering (IPO), Eraker sent a letter to the brokerage threatening legal action over patent violations. Redfin said at the time that the claims had no merit.
Eraker’s suits are also not the first time Redfin has tangled, legally, with its founding members. In 2014, Dougherty and Selinger filed a lawsuit claiming Redfin tried to cancel their shares in the company prior to the IPO. All the parties involved eventually settled that suit, though the details of the settlement were not disclosed.
According to their LinkedIn pages, Dougherty is now a vice president at logistics company Convoy Inc., while Selinger is the co-founder and CEO of consumer security firm Deep Sentinel.
Eraker continues to hold the title of founder at Surefield.
Update: This post was updated after publication with additional information from Eraker.
Correction: Eraker founded Redfin. Dougherty and Selinger, though described in the court documents as co-founders, joined the company at a later date. This originally misstated their role in the firm’s formation.
