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Fri, 07/31/2009

By Adam Weinstein

A major mortgage document firm filed state and federal lawsuits in San Francisco's U.S. District Court against its former business partner, Ellie Mae, alleging the software company violated antitrust and intellectual property laws.

Carson, California-based DocMagic, which also is seeking a permanent injunction against Ellie Mae, says that company let DocMagic and its clients use the Pleasanton,California-based software firm's online platforms, but subsequently blocked DocMagic's access and pressured its clients to use an Ellie Mae product in place of DocMagic.

According to the suit, DocMagic had been permitted to access Ellie Mae's ePass workflow system, but Ellie Mae abruptly terminated the agreement. Ellie Mae then told users of ePass and its other network, Encompass Closer, that they could no longer use DocMagic. Ellie Mae then allegedly blocked its users from transferring their data offline to a third-party service provider, effectively preventing current DocMagic clients from continuing to use the document service.

"We've had a long relationship with Ellie Mae and have also been a long-standing client of ePASS," Don Iannitti, DocMagic's CEO, told reporters. "They really didn't give us any alternative."

In seeking an injunction, DocMagic also alleges that Ellie Mae used the layout and design of DocMagic to create its Encompass system, then cut out the middleman and drove clients to its own unauthorized version.

"When we were working with them, we helped them in creating the workflow in the Encompass project. We recreated our screens and workflow for them. In replacing us, the look remained the same," Iannitti said.

"I think they want to save money," he said. "I think the client is the victim."