Ellie Mae Responds To DocMagic Lawsuits

Posted by Orb Staff on September 03, 2009 No Comments
Categories : Residential Mortgage

Ellie Mae has issued a statement in response to the state and federal lawsuits filed by DocMagic on Aug. 28.

According to the company, DocMagic and Ellie Mae had two agreements – an ePass Technology agreement and a reseller agreement – that were set to expire Sept. 1.

The ePASS agreement provided the means for vendors, such as DocMagic, to integrate their products and services into Ellie Mae's ePASS technology, which connects mortgage companies with service providers.

In October 2008, Ellie Mae acquired Online Documents Inc. from Stewart Lender Services in anticipation of major regulatory changes to RESPA, MDIA and TILA, slated for 2009 and 2010.

On April 28, DocMagic notified Ellie Mae that it was opting to end its Reseller Agreement with Ellie Mae. Less than a month later, Ellie Mae decided not to renew the "outdated terms" of its ePASS agreement with DocMagic. Ellie Mae proposed new terms for the agreement, but DocMagic did not respond, Ellie Mae says.

On Aug. 19, Ellie Mae sent DocMagic a notice of breach and copyright violation "as a result of DocMagic's unlawful attempts to induce Ellie Mae customers to breach their license agreements with Ellie Mae, as well as DocMagic's unlawful attempts to reverse-engineer Ellie Mae's technology and thereby gain access to Ellie Mae's software, servers and network resources, in violation of Ellie Mae's intellectual property rights."

DocMagic's lawsuits came next. DocMagic notified Ellie Mae that it would cease servicing document orders from their mutual customers on Aug. 31, which Ellie Mae says caused disruption. Ellie Mae further says it was unnecessary, because the reseller agreement provided for a 60-day "orderly transition period," during which clients could still place document orders with DocMagic.

"We are surprised and very disappointed that DocMagic has taken these drastic actions, particularly because of the obvious predictable negative impact that these actions have on DocMagic's own customers," says Ellie Mae's chief strategy office, Jonathan Corr.

"This is about one vendor that is displeased to be losing the overly favorable terms it negotiated a long time ago, even after those terms had expired," Corr adds.

SOURCE: Ellie Mae Inc.

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