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

Whatfix has been backed by SoftBank Vision Fund and Peak XV Partners (previously Sequoia Capital India). It has been alleged of gaining unauthorised access to its systems in an attempt to interfere with its customer relationships. Additionally, it tried to make misleading advertising claims about its products and used its design mark without permission.

The latest update in the case is that the United States District Court for the Northern District of California has ordered WalkMe to amend its complaint on 23 October. This order was given after the court denied WalkMe’s request for a temporary restraining order on 20 September.

The original complaint was filed on 8 August. According to court documents reviewed by a few media publications, WalkMe is expected to file its first amended complaint (FAC) or opposition to Whatfix’s motion to dismiss WalkMe’s complaint by 22 November. In the complaint filed on 8 August, WalkMe accused Whatfix of interfering with its customer relationships and persuading those customers to violate their subscription agreements with WalkMe.

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

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 USD 834 million as of Friday, is set to file its financials for the third quarter ended September on 14 November.

As per media reports, WalkMe has reported a total revenue of around USD 66.2 million in the second quarter of the current fiscal year, up by 10 per cent year-over-year. The previous year (which ended in December 2022), it recorded revenue worth over USD 245 million.

The lawsuit against Whatfix has come at a time when the company is receiving attention for raising a new round of funding. The company’s annual recurring revenue recently reached USD 70 million. Whatfix has attracted investment interest from private equity firm Warburg Pincus for the funding round.

Other investors have also held discussions with Whatfix, although the talks are still in early stages. Previously, the company was valued at USD 568 million after receiving USD 90 million in funding led by SoftBank in 2021. This legal trouble is the second such matter to emerge in the public domain in recent years as SaaS startups navigate the highly litigious US market.