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Fri, 07/31/2009

By Austin Kilgore

DocMagic filed state and federal lawsuits in United States Northern District Court, in San Francisco, 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's regulation-compliant loan document software was available to users of Ellie Mae's Encompass loan origination software (LOS) system and ePASS workflow platform. In the suit, DocMagic claims Ellie Mae used information gleaned from DocMagic's software integration to create its own similar and competing software product. Once it launched its own document software, Ellie Mae eliminated DocMagic access to the Encompass platform and encouraged users to switch document software products, the suits claim.

The suits also claims Ellie Mae recently modified its Encompass license agreement to prohibit users from utilizing the Encompass software development kit to transfer data from Encompass to a third party.

"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," DocMagic CEO Dominic Iannitti said in a statement. "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."

DocMagic said it is seeking an injunction to prohibit what it called Ellie Mae's unfair competition practices and payment for losses of at least $5m.

An Ellie Mae spokesperson declined to comment on the case, and said the firm would issue a statement in the coming days.