1

7
SUPERIOR COURT OF WASHINGTON FOR KING COUNTY
8
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
13
Defendants.
14
The Plaintiff, Mr. David Eraker (“Mr. Eraker”), alleges as follows against Defendants
15

16 Redfin Corporation (“Redfin”), and Madrona Venture Group LLC (“Madrona”) (collectively

17 “Defendants”):

18 I. NATURE OF THE ACTION

19 1. In 2005, while Redfin and Eraker were considering a Series A investment offer from
20 Madrona, Paul Goodrich and Madrona filed a provisional patent application based on information
21 learned during due diligence of Redfin, misappropriating the ideas of Mr. Eraker and other third
22 parties. Mr. Goodrich and Madrona concealed the provisional application from Mr. Eraker,
23 misrepresented its contents, kept it off of Redfin’s books before and after the Series A investment,
24 and assigned the application to Redfin only after Mr. Eraker had been ousted from the company.
25

COMPLAINT FOR PATENT INFRINGEMENT, CORRECTION OF CORR CRONIN LLP

INVENTORSHIP, AND FOR OTHER RELIEF – 1 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
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 1 2. After the Series A investment closed, Madrona and Redfin’s new management,
2 including Glen Kelman, continued to conceal the contents of the provisional patent filing from Mr.
3 Eraker. Eventually, Redfin ousted Mr. Eraker under other pretenses and induced him to sign a
4 termination agreement. Had Mr. Eraker known the facts concealed by Madrona and Redfin at that
5 time he would not have agreed to the termination.
6 3. As Mr. Eraker confided in others at the time, he was considering not accepting the
7 Series A investment from Madrona based on related facts, and if Mr. Eraker had known of the true
8 contents of the provisional patent filing he would not have agreed to accept the investment and lose
9 control of the company he founded. The fraudulent behavior has resulted in Mr. Eraker losing
10 millions of dollars of equity.
11 II. PARTIES
12 4. Plaintiff David Eraker is an individual who resides in the state of Washington.
13 5. Defendant Redfin is a corporation organized and existing under the laws of the state
14 of Delaware, with a principal place of business in Seattle, Washington.
15 6. Defendant Madrona is a Washington business corporation with its principal place of
16 business in Seattle, Washington.
17 III. JURISDICTION AND VENUE
18 7. This Court has jurisdiction over this matter pursuant to RCW 7.24.010 et seq.,
19 because a real and justiciable controversy exists pursuant to RCW 2.08.010.
20 8. Venue is proper in King County Superior Court pursuant to RCW 4.12.010 and
21 RCW 4.12.025 because Defendants reside in King County and a substantial part of the events or
22 omissions giving rise to the claims occurred in King County.
23

24
25

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INVENTORSHIP, AND FOR OTHER RELIEF – 2 1001 Fourth Avenue, Suite 3900
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 IV. FACTS
1
A. Redfin’s Founding
2
9. Mr. Eraker founded Redfin in 2002 and was later joined by co-founders Michael
3
Dougherty and David Selinger. Redfin was started to transform the way real estate was bought and
4
sold by leveraging technology.
5
10. Redfin began offering internet search services for real estate in 2004, incorporating
6
mapping elements that were unlike any real estate or mapping services at that time. Under the
7
guidance and direction of Mr. Eraker, Redfin released the first ever interactive online mapping
8
software identifying homes that were for sale.
9
11. Starting in 2004 and continuing into 2005, Redfin was the first and only company
10
to combine satellite data, aerial-photography data, multiple-listing data, county-assessor data, sold
11
data, tax-parcel data, and map data into a single, interactive, online interface and presentation.
12
12. In July 2006, Redfin was the recipient of the Innovator of the Year award by Inman
13
News, a leading online news source for the real estate industry.
14
13. Redfin filed provisional patent applications in 2004 and 2005 that serve as the
15
foundation for several issued and pending patent applications. Those patent applications disclose a
16
number of ideas, concepts, and technical details related to implementing a system for map-based
17
real estate search, ideas which originated with Mr. Eraker.
18
B. Madrona’s Investment in Redfin
19
14. In 2004, Mr. Eraker owned a significant proportion of Redfin’s stock and he was the
20
majority owner of the company and had control of all voting shares. By the end of 2004, several
21
venture capital groups were negotiating term sheets with Redfin, including Paul Goodrich at
22
Madrona.
23
15. Madrona engaged in due diligence regarding a potential investment for Redfin,
24
including the review of Redfin’s intellectual property and proprietary files. Madrona initially lost
25

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INVENTORSHIP, AND FOR OTHER RELIEF – 3 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
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 1 out in the bidding for Redfin, but Redfin’s potential deal with another venture capital firm fell
2 through.
3 16. In late 2004 and in the spring of 2005, Redfin and Mr. Eraker communicated with
4 investor/inventor Martin King (“Mr. King”) about a potential investment in Redfin.
5 17. Mr. Eraker and Mr. King also discussed Mr. King’s patented “iCovet” idea. Mr.
6 King’s idea was, generally, a method designed to create liquidity in a market for items not currently
7 for sale by enabling consumers to register interest in the item, alerting the owner of the item of the
8 interest, and providing notice to the consumer before an item is listed for sale.
9 18. On behalf of Redfin, Mr. Eraker signed a nondisclosure agreement with Mr. King
10 and drafted a business proposal to implement iCovet using the Redfin codebase.
11 19. In June 2005, Paul Goodrich and Madrona re-engaged with Redfin in due diligence
12 concerning a potential investment in the Company.
13 20. After due diligence, Madrona provided a bridge loan to Redfin in July 2005, with a
14 mutual option for another $500,000 loan and conversion of the loans to equity in 60 days (the
15 “Series A” investment).
16 21. Prior to signing the deal with Madrona, Mr. Eraker had three million Redfin shares
17 outright and a 10-year warrant on an additional three million shares.
18 C. Concealment of the Contents of the Illicit Patent Filing

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.
25

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INVENTORSHIP, AND FOR OTHER RELIEF – 4 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
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 1 24. In fact, Mr. Goodrich’s First to Know idea was essentially iCovet for real estate, and
2 it was indistinguishable from Mr. Eraker’s proposal to license iCovet and combine it with Redfin’s
3 existing map-based search and home-pricing technology as first disclosed by Mr. Eraker to Mr.
4 Goodrich and others at Madrona. Mr. Goodrich’s alleged idea was simply a system to allow
5 prospective home purchasers to indicate interest in purchasing non-listed homes and to allow home
6 owners to gauge possible demand, as well as the ability to connect buyers and sellers before listing.
7 25. Mr. Goodrich’s First to Know idea also relied upon the use of location-based search,
8 technology invented by Redfin and described in confidential documents and non-public patent
9 applications pending at the time. Mr. Goodrich’s First to Know idea also incorporated map-based
10 search technology that remains core to Redfin’s business, including technology that was and
11 remains in use by Redfin at redfin.com and for which Redfin has now received numerous granted
12 patents. The location-based search ideas included in Mr. Goodrich’s patent application included
13 ideas first disclosed to Mr. Goodrich and to Madrona in two confidential provisional applications
14 prepared from Mr. Eraker’s disclosures and three confidential non-provisional patent applications
15 also prepared from Mr. Eraker’s disclosures—which were provided to Madrona during due
16 diligence—as well as investment collateral and business and product plans from early in the first
17 quarter in 2004. Further, Mr. Goodrich also incorporated into his own provisional patent application
18 Eraker-originated IP related to home valuation, market analysis, and home value estimates and
19 included that in his secret provisional patent application.
20 26. Thus, First to Know was not a “new” idea; rather, Mr. Goodrich was improperly
21 attempting to patent Mr. King’s idea for iCovet without proper attribution or permission and it
22 incorporated substantial disclosures from Redfin’s existing IP, all of which had originated from
23 disclosures prepared by Mr. Eraker and disclosed in confidence to Madrona as a part of that
24 company’s due diligence.
25

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INVENTORSHIP, AND FOR OTHER RELIEF – 5 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
Fax (206) 625-0900
 1 27. Mr. Goodrich asked to meet with Mr. Eraker and Redfin patent counsel to discuss
2 First to Know. Mr. Eraker repeatedly objected to filing an application that contained Mr. King’s
3 iCovet business method. Redfin’s patent counsel drafted an initial specification, which included the
4 iCovet business method along with the use of location-based search technology enabled by Redfin’s
5 proprietary software features which had originated with Mr. Eraker.
6 28. Mr. Goodrich insisted, contrary to contemporaneous emails, that he had never heard
7 of iCovet, going so far as to claim by email that his First to Know idea “had nothing to do with
8 that,” referring to a method by which potential sellers and potential buyers are matched through
9 software before a property is offered for sale. Mr. Goodrich also claimed that First to Know was
10 his own, original idea, even though he is not an inventor, he had never patented an idea of his own,
11 and even though he learned of this idea while undertaking due diligence on behalf of Madrona.
12 29. On August 19, 2005, Mr. Eraker and Mr. Goodrich discussed a draft First to Know
13 provisional patent application, part of which had been drafted by Mr. Eraker based on Mr. King’s
14 iCovet business method. Mr. Goodrich continued to assert that his idea did not overlap with iCovet
15 or Redfin’s intellectual property. Mr. Goodrich asserted that Redfin could not prevent him from
16 filing his own provisional patent application, and if the idea overlapped with iCovet, then a license
17 would be obtained from Mr. King. Mr. Goodrich said that he would personally contact Mr. King
18 for permission to license iCovet.
19 30. Based on Mr. Goodrich’s assertions, Mr. Eraker understood that the draft First to
20 Know provisional patent application would be revised to delete any reference to Mr. King’s iCovet
21 technology. In response to this understanding, Mr. Eraker stated that he was anxious to see an
22 updated draft of Mr. Goodrich’s First to Know provisional patent application.
23 31. After Mr. Eraker objected to including iCovet in the proposed patent filing, Mr.
24 Goodrich instructed Mr. Eraker not to speak about First to Know or iCovet to anyone outside of
25 Redfin, including Mr. King.

COMPLAINT FOR PATENT INFRINGEMENT, CORRECTION OF CORR CRONIN LLP

INVENTORSHIP, AND FOR OTHER RELIEF – 6 1001 Fourth Avenue, Suite 3900
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Tel (206) 625-8600
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 1 32. On August 22, 2005, Mr. Goodrich filed the First to Know provisional patent
2 application on his own behalf, using Redfin’s patent counsel, to whom Redfin had paid a retainer
3 of $5,000 for a non-provisional patent filing.
4 33. Mr. Goodrich was listed as the only inventor in the application. Mr. Goodrich did
5 not identify either Mr. Eraker or Mr. King as co-inventors in the provisional patent application,
6 despite the use of location-based search methods, the iCovet business method, and other concepts
7 detailed in Mr. Eraker’s specification draft, including those related to home pricing.
8 34. Mr. Eraker was never provided a copy of the application as filed and was not aware
9 of its contents or of the fact that Mr. Goodrich had filed any application even remotely related to
10 the iCovet business method as modified by Mr. Eraker to be applicable in a real estate context.
11 35. Mr. Goodrich concealed the contents of the patent filing from Mr. Eraker, the
12 application itself, as well as the fact that any patent application incorporating the iCovet business
13 method was filed, despite Mr. Eraker’s prior objections, and contrary to Mr. Goodrich’s
14 misrepresentations that he would be sure to license iCovet from Mr. King should he or Madrona
15 ever incorporate Mr. King’s IP in a patent filing.
16 36. In early September 2005, shortly after Mr. Goodrich’s secret patent filing, the Series
17 A round equity investment with Madrona closed.
18 37. Even though Mr. Goodrich had used Redfin’s patent counsel for the filing and
19 Redfin paid for the filing, the First to Know provisional patent application was not included in the
20 schedule of exceptions for the Series A round. In fact, Mr. Eraker specifically asked whether the
21 application, which he had not seen, would be included in the schedule of exceptions, but Mr.
22 Goodrich and Madrona did not reply. If the First to Know provisional patent application had been
23 included on the schedule of exceptions for the Series A round of Redfin financing, Mr. Goodrich
24 and Madrona would have been required to provide Mr. Eraker with a copy of the application to
25 review.

COMPLAINT FOR PATENT INFRINGEMENT, CORRECTION OF CORR CRONIN LLP

INVENTORSHIP, AND FOR OTHER RELIEF – 7 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
Fax (206) 625-0900
 1 38. At the time of Mr. Goodrich’s secret provisional patent application, Mr. Eraker had
2 control of Redfin. After receiving the Madrona bridge loan, Redfin had almost a full year to seek a
3 different investor before the loan was due. Mr. Eraker was under no obligation to accept Madrona’s
4 optional equity investment and surrender control of Redfin and he would not have done so had he
5 known the contents of Mr. Goodrich’s secret patent filing.
6 39. Additionally, Mr. Eraker would not have surrendered his control of Redfin to
7 Madrona had he known about Mr. Goodrich’s theft of Mr. King’s idea and Mr. Goodrich’s
8 appropriation of Redfin’s intellectual property via the provisional patent application.
9 40. On information and belief, Mr. Goodrich, on behalf of Madrona and with Madrona’s
10 knowledge and consent, knew that if Mr. Eraker became aware of the content of the provisional
11 patent filing, Mr. Eraker would have considered the action an appalling breach of trust and would
12 not consummate the Series A deal with Madrona. In fact, Mr. Eraker discussed this very idea with
13 Mr. King.
14 41. On information and belief, Mr. Goodrich, on behalf of Madrona and with Madrona’s
15 knowledge and consent, intended to use the secret patent filing to force Redfin to deal with Madrona
16 in the event Mr. Eraker rejected the terms of Madrona’s planned investment in Redfin.
17 42. Once Mr. Goodrich and Madrona had improperly won control of Redfin by failing
18 to disclose the secret patent filing, the application (which included substantial additions from Mr.
19 Eraker’s development work at Redfin) was assigned to Redfin. Mr. Eraker has not been named as
20 an inventor on this patent application and neither has Martin King.
21 43. Following the Series A round, Mr. Kelman became CEO of Redfin.
22 44. The Madrona Series A round led to Mr. Eraker’s loss of control of Redfin and
23 eventual separation from the company.
24
25

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INVENTORSHIP, AND FOR OTHER RELIEF – 8 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
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 1 D. Defendants Concealed the Illicit Patent Filing

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.
25

COMPLAINT FOR PATENT INFRINGEMENT, CORRECTION OF CORR CRONIN LLP

INVENTORSHIP, AND FOR OTHER RELIEF – 9 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
Fax (206) 625-0900
 1 50. Based on representations made to Mr. Eraker by individuals and attorneys at Redfin,
2 including Mr. Kelman, Mr. Eraker agreed to give up his seat on the Redfin board representing
3 common stockholders. Mr. Eraker eventually went on sabbatical shortly thereafter and was never
4 allowed to return as an employee to the company he founded.
5 51. After Mr. Eraker left, Mr. Goodrich assigned his secret First to Know application to
6 Redfin. Mr. Goodrich added Redfin employees Brian Marsh and Bryan Selner to the patent
7 application as inventors, even though neither individual was a Redfin employee in August 2005
8 when Mr. Goodrich filed the patent application.
9 E. Eraker Discovered Redfin’s and Madrona’s Concealment During Due Diligence

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.

COMPLAINT FOR PATENT INFRINGEMENT, CORRECTION OF CORR CRONIN LLP

INVENTORSHIP, AND FOR OTHER RELIEF – 10 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
Fax (206) 625-0900
 1 56. Almost immediately after Mr. Eraker left Redfin in 2006, Mr. Goodrich filed a non-
2 provisional patent application claiming priority to his secret provisional patent application, and had
3 that non-provisional application assigned to Redfin.
4 57. The similarities between Redfin’s application, King’s iCovet patent, and Mr.
5 Eraker’s proposed use of iCovet at Redfin are blatantly obvious. Each proposes to sell unlisted,
6 non-MLS homes, aggregate buyers’ interest in specific unlisted homes, notify sellers about the
7 interest from aggregate buyers, and facilitate direct transactions between the buyers and sellers.
8 Furthermore, the Redfin application relies on location-based search and home-pricing technologies,
9 both of which were at the core of Redfin’s technology at the time.
10 58. Upon information and belief, Mr. Goodrich concealed the contents of the initial
11 patent filing from Mr. Eraker and Mr. King, and relied on information that he obtained from his
12 due diligence on Redfin to file the First to Know patent application.
13 59. Attempting to learn more about this application, Mr. Eraker asked Redfin’s patent
14 counsel how the filing had been allowed to happen during due diligence, and how this occurred
15 without Mr. Eraker’s knowledge. Redfin’s patent counsel responded that it had been “done for [Mr.
16 Eraker’s] own good.”
17 60. Mr. Goodrich concealed with deceptive intent the true inventors of the invention
18 claimed in the patent application and critical prior art from the United States Patent & Trademark
19 Office.
20 F. Defendants’ Motive to Conceal

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.

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INVENTORSHIP, AND FOR OTHER RELIEF – 11 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
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 1 62. Mr. Goodrich’s self-dealing was a clear breach of trust with Mr. Eraker and Redfin,
2 and of Mr. Eraker’s non-disclosure agreement with Mr. King.
3 63. Redfin concealed the patent application from Mr. Eraker for the same reasons, and
4 because Redfin’s First to Know patent application filing was invalid unless Mr. Eraker and Mr.
5 King were added as inventors.
6 64. Likewise, Redfin intentionally omitted Mr. Eraker as an author in the non-
7 provisional patent filing and continued to hide the patent application from Mr. Eraker during the
8 period when Mr. Eraker was induced to sign over his shares, his seat on the board, and agree to the
9 deal that hastened his exit from the company.
10 65. Upon information and belief, Redfin intentionally removed Mr. Eraker from
11 influencing the company’s IP portfolio in 2005–06 in order to conceal Mr. Goodrich’s misconduct
12 and self-dealing, and to misappropriate and omit Mr. Eraker from patent filings.
13 66. Upon information and belief, the provisional and non-provisional patents owned by
14 Redfin at the time that Mr. Eraker left the company are now worth hundreds of million dollars, or
15 more.
16 67. If Mr. Eraker had not been fraudulently induced to surrender his shares and 10-year
17 warrants, his Redfin stock would now be worth in excess of twenty million dollars.
18 V. CAUSES OF ACTION
19 CAUSE OF ACTION No. 1: Fraudulent Inducement by Madrona & Goodrich
20 68. Plaintiffs incorporate and re-allege the allegations contained in the preceding
21 paragraphs.
22 69. Mr. Goodrich told Mr. Eraker that he would seek a license from Mr. King for iCovet
23 if there was any overlap with the First to Know filing, but he did not obtain a license. Mr. Goodrich
24 did not disclose the provisional patent filing contents to Mr. Eraker during the Series A negotiations,
25 even though Mr. Goodrich filed the provisional application before the Series A round closed. Mr.

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 1 Goodrich instructed Mr. Eraker not to discuss First to Know with Mr. King or anyone outside of
2 Redfin.
3 70. These misrepresentations and nondisclosures were material to the Series A
4 negotiations between Redfin and Madrona. Mr. Goodrich submitted the provisional application
5 without obtaining a license from Mr. King, and in violation of Redfin’s nondisclosure agreements.
6 Mr. Goodrich incorporated Redfin’s confidential intellectual property, which he obtained during
7 due diligence. Mr. Goodrich knew that Mr. Eraker regarded these matters important, and that he
8 would not have proceeded with the Series A investment if he knew of the misrepresentations and
9 nondisclosures.
10 71. Mr. Goodrich made these statements and took these actions on behalf of Madrona,
11 as Madrona’s agent, and as part of his employment by Madrona.
12 72. On information and belief, Mr. Goodrich and Madrona were aware that the
13 misrepresentation and nondisclosure were false.
14 73. On information and belief, Mr. Goodrich and Madrona intended Mr. Eraker to rely
15 on the misrepresentations and nondisclosures.
16 74. Mr. Eraker did not know that Mr. Goodrich had filed a provisional patent application
17 that included Martin King’s iCovet technology as modified using Redfin’s map-based search and
18 home-pricing technology in order to match would-be sellers of unlisted homes and would-be buyers
19 of unlisted homes when he agreed to the Series A round of financing.
20 75. Mr. Eraker would not have closed the Series A round of financing with Madrona if
21 he was aware of the contents of Mr. Goodrich’s secret provisional patent filing, misrepresentation,
22 and/or nondisclosure.
23 76. The actions of Madrona and Mr. Goodrich have defrauded Mr. Eraker out of millions
24 of shares of Redfin.
25 77. Mr. Eraker did not discover this cause of action until the summer of 2016.

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INVENTORSHIP, AND FOR OTHER RELIEF – 13 1001 Fourth Avenue, Suite 3900
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 1 78. The doctrine of equitable tolling applies to this cause of action because Defendants
2 acted with bad faith and deceived Mr. Eraker and because Mr. Eraker exercised reasonable
3 diligence.
4 CAUSE OF ACTION No. 2: Fraudulent Concealment by Redfin & Kelman
5 79. Plaintiffs incorporate and re-allege the allegations contained in the preceding
6 paragraphs.
7 80. Mr. Kelman and Redfin concealed the First to Know provisional patent application
8 from Mr. Eraker, even though Mr. Eraker was a Redfin board member and had operational
9 responsibility for Redfin’s IP Portfolio. The First to Know provisional patent application, which
10 was eventually assigned to Redfin, was never included in Redfin’s IP Portfolio or provided to Mr.
11 Eraker.
12 81. This concealment was material to Mr. Eraker’s consent to stepping down from the
13 board and agreement to additional outside investment for Redfin.
14 82. This concealment was material to Mr. Eraker’s agreement to the severance
15 agreement, which he would not have signed had all material facts and information concerning Mr.
16 Goodrich’s secret patent filing been known.
17 83. Upon information and belief, Mr. Kelman and Redfin were aware that they were
18 concealing the First to Know provisional patent filing from Mr. Eraker and intended that Mr. Eraker
19 rely on their misrepresentations.
20 84. Mr. Eraker did not know that Mr. Goodrich had misrepresented the contents of the
21 provisional patent application when he agreed to: (a) step down from the board; (b) surrender his
22 control by accepting outside investment; and (c) sign the severance agreement.
23 85. Mr. Eraker would not have agreed to step down from the board, and would not have
24 consented to an outside investment from Vulcan, or signed the severance agreement if he had been
25 aware of the concealed facts.

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INVENTORSHIP, AND FOR OTHER RELIEF – 14 1001 Fourth Avenue, Suite 3900
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 1 86. The actions of Mr. Kelman and Redfin have defrauded Mr. Eraker out of millions
2 of shares of Redfin and his control of the company.
3 87. Mr. Eraker did not discover this cause of action until the summer of 2016.
4 88. The doctrine of equitable tolling applies to this cause of action because Defendants
5 acted with bad faith and deceived Mr. Eraker and because Mr. Eraker exercised reasonable
6 diligence.
7 CAUSE OF ACTION No. 3: Negligent Misrepresentation by Defendants
8 89. Plaintiffs incorporate and re-allege the allegations contained in the preceding
9 paragraphs.
10 90. Mr. Goodrich falsely told Mr. Eraker that he would seek a license for iCovet from
11 Mr. King.
12 91. Mr. Goodrich concealed the truth about the provisional patent filing from Mr.
13 Eraker.
14 92. Mr. Kelman and Redfin concealed the truth about the First to Know provisional
15 patent application from Mr. Eraker.
16 93. Mr. Kelman, Redfin, Mr. Goodrich, and Madrona knew or should have known that
17 the misrepresentations and omissions would affect Mr. Eraker’s business decisions.
18 94. Upon information and belief, Mr. Kelman, Redfin, Mr. Goodrich, and Madrona
19 negligently supplied the misrepresentations and omissions to Mr. Eraker.
20 95. Mr. Eraker reasonably relied upon the misrepresentations and omissions during the
21 course of his business decisions, including the agreement to accept Series A financing, to step down
22 from the board, and to sign the severance agreement.
23 96. Upon information and belief, Mr. Kelman, Redfin, Mr. Goodrich, and Madrona had
24 knowledge of Mr. Eraker’s reliance.
25

COMPLAINT FOR PATENT INFRINGEMENT, CORRECTION OF CORR CRONIN LLP

INVENTORSHIP, AND FOR OTHER RELIEF – 15 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
Fax (206) 625-0900
 1 97. The misrepresentations and omissions proximately caused Mr. Eraker to incur
2 damages.
3 98. Mr. Eraker did not discover this cause of action until the summer of 2016.
4 99. The doctrine of equitable tolling applies to this cause of action because Defendants
5 acted with bad faith and/or deceived Mr. Eraker, and Mr. Eraker exercised reasonable diligence.
6 VI. PRAYER FOR RELIEF
7
A. Judgement in favor of Mr. Eraker on fraudulent inducement, fraudulent
8
concealment, and negligent misrepresentation claims and an award of damages in an amount to be
9
proven at trial;
10
B. For prejudgment interest; and an award of attorneys’ fees and costs; and
11

12 C. Such other and further relief as the Court deems just and proper.

13 VII. JURY DEMAND

14 Plaintiff demands a trial by jury of all claims so triable.
15
Dated: May 11, 2020.
16
CORR CRONIN LLP
17

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
21

22

23

24
25

COMPLAINT FOR PATENT INFRINGEMENT, CORRECTION OF CORR CRONIN LLP

INVENTORSHIP, AND FOR OTHER RELIEF – 16 1001 Fourth Avenue, Suite 3900
Seattle, Washington 98154-1051
Tel (206) 625-8600
Fax (206) 625-0900