Two real estate technology startups that have each raised hundreds of millions of dollars in venture capital have filed dueling lawsuits against each other in federal court.
On Monday, Knock, a company that helps homeowners buy a new home before they sell their current home, and EasyKnock, a company that buys homes and leases them back to their previous owners, each filed lawsuits against each other alleging trademark infringement and unfair competition, among other allegations.
Both companies have ample funds with which to fight this battle. Knock raised $400 million in a Series B round in January 2019, bringing its total funding to $434.5 million, according to Crunchbase. EasyKnock recently raised $25 million in a Series B round, adding to its seed round of investment that raised $103 million and its Series A round, which brought in $215 million in debt-equity funding.
Both companies claim that their use of their respective trademarks are senior to the other’s use. In its complaint, Knock, which incorporated in Delaware in August 2015 as Knockaway Inc., says it has been using the name and mark “KNOCK” as its corporate name and trademark in connection with real estate services since 2016, including through its website knock.com (previously knock.re and knock.co) since July 2016. The company filed a federal trademark application with the U.S. Patent and Trademark Office last month, on September 23, for the KNOCK mark. That application is currently awaiting assignment to an examining attorney.
Meanwhile, EasyKnock, which incorporated in Delaware in October 2016, says it has been using the trademark “EASYKNOCK” since at least December 2016 and filed two federal trademark applications for the EASYKNOCK mark in June 2017, both of which are currently suspended. According to EasyKnock’s complaint, this is due to “several prior pending applications, none of which are owned by Defendant.”
On September 25, two days after Knock submitted its trademark application to the USPTO, the company sent a cease and desist letter to EasyKnock demanding that EasyKnock “immediately cease all use and infringement of the Knock Mark and cease using any and all marks that incorporate the term ‘Knock’ including the name and mark EasyKnock.”
In the letter, included in EasyKnock’s complaint, Knock alleges that EasyKnock’s launch of its MoveAbility program puts it in direct competition with Knock’s Home Swap service and its previous home trade-in services. EasyKnock’s MoveAbility, which launched around March 2020, enables homeowners to sell their property to EasyKnock and stay in the home as renters during their search for a new home to buy and own. Knock’s Home Swap service, launched in July, gives sellers the opportunity to buy and move into their new home before they sell the old one by providing the primary mortgage to purchase a new home and loans for continued mortgage payments and repairs on the old home. Both companies’ services partner with real estate agents.
“Knock has invested heavily the last five years building our brand and has become widely known among both consumers and the real estate industry for solving the chicken and egg problem of buying your new dream home before selling your old house,” a Knock spokesperson told Inman in an emailed statement.
“When it launched MoveAbility, EasyKnock not only became a direct competitor, it dramatically increased the likelihood of confusion with both consumers and the industry that is likely to harm Knock’s reputation and ability to compete. As a result, it is our obligation to take any and all necessary action to protect the Knock brand in the best interest of our customers, partners and shareholders.”
In an emailed statement, Jarred Kessler, CEO and co-founder of EasyKnock, told Inman, “After Knock threatened to sue over confusion in the market, we in fact filed a complaint first. Our legal action is more than defending a trademark. We have built a strong company because our programs work. Their company is responsible for creating a confusing product, which only recently pivoted in July. Knock’s market challenges are uniquely their own.
“This lawsuit is a futile attempt to capitalize on the trust our brand has created in the market as we set a new standard in homeownership through a marketplace of products that empower homeowners and offer fast, reliable and supportive service across the entire home selling and leasing process. While other companies have quickly stood up products that attempt to capitalize on a market trend, we have built a strong company on the back of a proven model. Millions of people know our name and what it stands for: a commitment to providing alternatives to homeownership that help guarantee financial freedom.”
The litigation is complicated by the fact that both companies have changed their business models since their respective launches. Knock started out as a kind of backward iBuyer, helping homeowners buy with an all-cash offer. The company would buy a home with all-cash for consumers, then the consumer would buy that home from Knock, creating a double transaction. The company isn’t buying homes anymore, but it will still give homeowners the guarantee of buying their home if it doesn’t sell after six months.
EasyKnock started out as a “[b]roker free” direct sales platform between homebuyers and sellers that pulled in real-time market data on homes on and off the market where homeowners could set a price and “test the waters,” according to the Wall Street Journal. Kessler founded EasyKnock after resigning from his position as head of U.S. equities at Cantor Fitzgerald in December 2015. The firm had faced allegations over the sale of unregistered microcap stocks and the Financial Industry Regulatory Authority (Finra) suspended and fined Kessler, alleging he had failed to set up a system of properly overseeing the sales in his role there, according to the Journal. He settled the case without admission of guilt.
EasyKnock launched its first leaseback product, Sell and Stay, in October 2017, offering homeowners who want to turn their house into cash but don’t qualify for a reverse mortgage the ability to sell their property online and stay on as renters for a fixed period of time, according to The Real Deal.
In its complaint, Knock said that, as opposed to Sell and Stay, EasyKnock’s MoveAbility is “extremely similar” to Knock’s Home Swap and Home Trade-In programs and similarly aims to provide increased liquidity to homeowners to facilitate a more seamless transition between homes.
“EasyKnock expressly markets MoveAbility as an alternative to a bridge loan, a key product that Knock offers as part of its Home Swap service . Upon information and belief, EasyKnock’s Sell & Stay service had no such bridge loan component,” Knock’s attorneys wrote.
“EasyKnock’s use of the Knock Mark in its name is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of EasyKnock with Knock, or as to the origin, sponsorship or approval of EasyKnock’s goods, services or commercial activities by Knock, all to the damage and detriment of Knock’s reputation and goodwill,” they added.
Knock’s complaint alleges direct and contributory trademark infringement, false designation of origin and unfair competition, common law trademark infringement, and common law unfair competition. It seeks an injunction barring EasyKnock from using the Knock mark in any form, an award of damages that Knock has sustained and profits EasyKnock has derived as a result of its alleged trademark infringement, treble damages, attorneys fees, and restitution to Knock for any unjust enrichment.
EasyKnock’s complaint seeks a judgment from the court declaring that EasyKnock’s use of the EasyKnock mark does not infringe on Knock’s rights, that there is no likelihood of consumer confusion between the EasyKnock trademark as used in connection with EasyKnock’s services and Knock’s trademark in connection with its services, and that EasyKnock has not competed unfairly with Knock or engaged in any false endorsement in violation of the law.
“The services offered by Plaintiff and Defendant under the KNOCK and EASYKNOCK marks are not similar and not sufficiently related to create any likelihood of confusion,” EasyKnock’s attorneys wrote.
“Plaintiff’s EASYKNOCK mark is used in connection with services that allow homeowners to unlock and access the value of their homes. Defendant’s KNOCK mark is used in connection with services that allow individuals to sell their homes and buy new ones.
“The consumers of these services are thus interested in different things. Plaintiff’s customers are interested [in] gaining access to cash using the value of their homes whereas Defendant’s customers are interested in moving.”
In addition, EasyKnock’s attorneys allege that EasyKnock’s use of its mark is senior to Knock’s use of its mark with regards to its services, pointing out that EasyKnock was using the EasyKnock mark years before Knock launched its Home Swap program in July 2020. Therefore, it is Knock who is infringing on EasyKnock’s trademark rights, EasyKnock’s attorneys allege.
In addition to declarations of non-infringement and no unfair competition, EasyKnock’s complaint alleges false designation of origin and unfair competition, common law trademark infringement and unfair competition, and false advertising and deceptive acts and practices in violation of New York law.
The complaint seeks a permanent injunction barring Knock from using the Knock mark, an accounting of all gains, profits, savings and advantages realized by Knock for its alleged violations, treble damages, attorneys fees, and an order to deactivate all websites and deliver up for destruction any promotional materials that would violate the injunction. Treble damages pertain to a statute permitting a court to triple the amount of compensatory damages.
Read EasyKnock’s complaint:
Read Knock’s complaint: