whatfix walkme court case: SaaS company Whatfix dragged to court by rival WalkMe

Bengaluru and San Jose-headquartered software-as-a-service (SaaS) startup Whatfix has been dragged to court by its Israeli-origin and Nasdaq-listed rival WalkMe.

WalkMe has alleged that Whatfix, which is backed by SoftBank Vision Fund and Peak XV Partners (earlier Sequoia Capital India), gained unauthorised access to its systems, sought to interfere with its customer relationships, made misleading advertising claims about its products and used its design mark without permission.

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The latest developments in the case includes United States District Court for the Northern District of California’s order to WalkMe to amend its complaint on October 23.

The October order came after the court denied WalkMe’s application for a temporary restraining order on September 20. The complaint was initially filed on August 8.

WalkMe is expected to file its first amended complaint (FAC) or opposition to Whatfix’s motion to dismiss Walkme’s complaint by November 22 as per court filings reviewed by ET.

In its complaint dated August 8, WalkMe charged that Whatfix had interfered with multiple WalkMe customer relationships and induced those customers to breach their subscription agreements with WalkMe.

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WalkMe added that the customers, whose names were not disclosed in the filings, provided Whatfix employees with user accounts and log-in credentials.

Whatfix GFXETtech

Both the companies denied ET’s requests for comment, citing confidentiality as the litigation is currently ongoing.

Among other allegations, WalkMe accused Whatfix of sharing misleading comparative advertising claims that downplay WalkMe’s product capabilities and in doing so, also repeatedly used WalkMe’s logo without permission.
WalkMe, with a market cap of about $834 million as of Friday, is set to file its financials for the third quarter ended September on November 14.

In the second quarter ended June 2023, WalkMe recorded a total revenue of $66.2 million, up 10% year-over-year. In the year ended December 2022, it reported revenues of over $245 million.

The lawsuit comes at a time when Whatfix is in the news for raising a new round of funding after growing to $70 million in annual recurring revenue (ARR) recently.

On September 8, ET had reported that Whatfix had piqued investment interest from the likes of private equity firm Warburg Pincus for a new round of funding being planned at the company.

The funding talks were still in early stages and other investors have also held discussions with Whatfix. The company was last valued at $568 million after its $90 million funding led by SoftBank in 2021, as per Tracxn data.
Whatfix’s legal trouble is the second such matter that has surfaced in public domain in recent years as SaaS startups build go-to-market motions in the highly litigious market that is the US.

In November 2021, SaaS unicorn Icertis faced a lawsuit from its client Change Healthcare. The Nasdaq-listed client had accused the Bellevue- and Pune-based contract management software provider of breaching contract, misrepresenting product, and staff capacities, failing to deliver on promises and causing cost overruns.

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