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Fri, 07/31/2009

CARSON, CA. AUGUST 28, 2009. DocMagic, Inc. (DocMagic), developer of DocMagic®, the industry’s leading technology for compliant mortgage loan document preparation, announced today that it has filed a lawsuit in United States Northern District Court (San Francisco, CA) against former ePASS and Reseller partner Ellie Mae for antitrust violations, intentional interference with contractual relationships, interference with prospective economic advantage and unfair competition. DocMagic also announced that it filed a lawsuit seeking a permanent injunction against Ellie Mae in San Francisco Superior Court arising out of Ellie Mae's misuse of DocMagic's intellectual property in the Ellie Mae Docs system.

The antitrust suit alleges that DocMagic was provided access to the ePASS network until Ellie Mae notified DocMagic of its intent to terminate its ePASS Agreement and subsequently took drastic steps to prevent its users from accessing DocMagic products through unfair and anti-competitive behavior including sabotaging clients from accessing DocMagic altogether through alternative web service calls. Ellie Mae began notifying ePASS Network users that DocMagic will no longer be available on ePASS or Encompass Closer, and that DocMagic users would be moved to Ellie Mae’s loan document service instead, and began changing the terms of the Encompass User Agreements to prohibit the transfer of data from Encompass to any third-party service provider outside of the ePASS network.

The complaint for injunctive relief filed simultaneously by DocMagic in San Francisco Superior Court is based on Ellie Mae’s unauthorized use of DocMagic’s intellectual property including DocMagic’s user interface, workflow, terminology and overall look and feel in Ellie Mae’s own document system, attempting to duplicate the DocMagic systems data entry steps, audit processes, and ultimately the loan document creation process. DocMagic discovered that Ellie Mae was promoting its own document services using DocMagic’s intellectual property when loyal DocMagic clients began contacting DocMagic to report what was happening.

"We knew we had no choice when Ellie Mae notified its LOS users that DocMagic would no longer be available to its LOS users as of September 1, then took steps to deprive access to third-party services outside of ePASS, creating huge business disruption issues for hundreds of Encompass users. These kinds of actions create unnecessary problems for our industry and the flow of business which only hurts the customers we serve, and our industry’s recovery," said Dominic Iannitti, CEO of DocMagic. "This conduct has far reaching implications for settlement service providers in general. Forcing service providers to either agree to pay whatever Ellie Mae demands for the privilege of ePASS inclusion, tolerate intellectual property infringement and require its LOS customers and their borrowers to use only ePASS providers is a pattern of practice that our industry doesn’t have room for, especially now. While we regret being forced into this position, we feel strongly that everyone in our industry must work together in good faith to support proprietary innovation and good faith cooperation in order to meet the challenges of the current lending environment, not create problems for our industry merely to gain an unfair competitive advantage at the expense of the lending community and the borrowers we serve. Quite simply, we had no choice but to stand up for our customers, service providers, fair competition and fair play in our marketplace."