Ellie Mae Responds to Suit with its own DocMagic Allegations

Mortgage software developer Ellie Mae is now releasing the details of its counterclaim against DocMagic. Ellie Mae is alleging that DocMagic, the document service provider, attempted to violate the origination technology provider’s intellectual property rights by reverse engineering technology in order to wrongfully gain access to Ellie Mae’s software servers and network resources. The allegations come after DocMagic filed suit last week against Ellie Mae claiming it was conducting unfair business practices. Ellie Mae maintains the suit is the result of a disgruntled vendor. “This lawsuit is not about anti-competitive behavior, as our ePass technology currently supports 10 of the industry’s leading document services providers, and thousands of other service providers from which our customers can choose,” Jonathan Corr, Ellie Mae chief strategy officer. “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.” Ellie Mae said it had two contracts with DocMagic, a technology agreement for ePass and a reseller agreement for DocMagic’s document services. Ellie Mae said it was DocMagic that decided to terminate the reseller agreement in April. Ellie Mae claimed the ePass contract was outdated and that’s why in May, it notified DocMagic of its plan to terminate the contract when it expired on Sept. 1. In the suit, DocMagic claims Ellie Mae used information gleaned from DocMagic’s software integration with ePass to create its own similar and competing software product. At the same time, Ellie Mae acquired Online Documents from Stewart Lender Services to create its own document services software. Ellie Mae claims it acquired the Online Documents system in anticipation of major regulatory changes to the Real Estate Settlement Procedures Act (RESPA), the Mortgage Disclosure Improvement Act (MDIA) and the Truth in Lending Act (TILA). “Ellie Mae wanted to be able to provide a unified platform to allow customers to comprehensively address the anticipated challenges of complying with these new regulations,” the company said in a statement. Ellie Mae also said it was DocMagic that cut off access of its services through Encompass and ePass. DocMagic claimed it was Ellie Mae that stopped the service. Write to Austin Kilgore.