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Ellie Mae Gives Its Side of DocMagic Suit

Mortgage software developer Ellie Mae is now releasing the details of its counterclaim against DocMagic. The suit revolves around the relationship between DocMagic’s online document service and three Ellie Mae products, Ellie Mae Docs, ePass and Encompass. Ellie Mae Docs is essentially a private-label document service that was a hybrid of DocMagic’s service and another similar product, DocuTech. Launched in 2006, Ellie Mae entered into reseller agreements with both companies for their software for use in the system. In October 2008, Ellie Mae acquired a third document service, Online Documents, Inc. from Stewart Lender Services and integrated it into Ellie Mae Docs. In its suit, DocMagic claims Ellie Mae had access to its proprietary information, and along with the technology it acquired with Online Documents, used it to create a new version of Ellie Mae Docs that didn’t use DocMagic’s software. In his first press interview since online document service provide DocMagic filed suit Friday, Ellie Mae chief strategy officer Jonathan Corr denied the claim to HousingWire because he said Ellie Mae did not have access to DocMagic’s proprietary systems. “I’m not sure how we would do it, as far as reverse engineering their back-end system when we don’t really see how it works,” he said. “It’s just a black box to us and we don’t have access to their systems.” In the suit, DocMagic alleges in April, Ellie Mae notified the company of its intention to terminate the reseller agreement on Sept 1. Corr acknowledges that Ellie Mae did so, but said it was only after DocMagic issued the first termination notice in April. According to the reseller agreement, the two companies were to have a 60-day transition period to phase DocMagic’s systems from Ellie Mae Docs. DocMagic, through the lawsuit filing, and Ellie Mae, through Corr’s interview, both said DocMagic terminated the agreement without completing the 60-day period that would have started Sept. 1. The second portion of the suit involves DocMagic inclusion in ePass, a product that connects third-party software to Ellie Mae’s Encompass loan origination software. After the notice to terminate the reseller agreement in April, Ellie Mae notified DocMagic its intent to terminate DocMagic’s ePass contract. Previously, users were able to access DocMagic through Encompass via ePass. Corr said Ellie Mae’s ePass contract with DocMagic was outdated and the company wanted to renegotiate. In the suit, DocMagic claims Ellie Mae has blocked DocMagic access through ePass. It said Ellie Mae is attempting to monopolize the document service sector and is encouraging DocMagic customers to switch to Ellie Mae Docs. Corr said his company is willing to “bend over backwards” to help DocMagic customers switch to Ellie Mae Docs if they so chose, but added there are 10 other document service providers that are available to Encompass users through ePass. Corr added his company has electronically observed DocMagic attempting to create methods of circumventing Ellie Mae’s ePass system to connect DocMagic’s software with Ellie Mae’s Encompass loan origination platform. Ellie Mae alleges DocMagic did so with unauthorized access to a software development kit (SDK) used for Encompass. DocMagic said its use of the SDK is legitimate and Ellie Mae is threatening legal action for using the SDK in the manner in which it was designed. Write to Austin Kilgore.

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