Ellie Mae Responds to DocMagic Lawsuits

PLEASANTON, CA —September 2, 2009—Ellie Mae^®, the software, technology and services provider for mortgage bankers, brokers, and other mortgage originators, offers the following clarifying facts in response to DocMagic’s lawsuits filed on August 28, 2009:

• DocMagic and Ellie Mae have been parties to two agreements: an ePASS^® Technology Agreement and a Reseller Agreement.  These agreements were set to expire on September 1, 2009.
• The ePASS Agreement provided the means by which a vendor, such as DocMagic, can integrate their products and services into Ellie Mae’s ePASS technology.   Ellie Mae’s ePASS technology is a patented electronic platform built into Ellie Mae’s Encompass^® Mortgage Management Solution, which enables mortgage companies to easily and securely conduct transactions with thousands of settlement service providers, including 10 document service providers that render services similar to DocMagic’s.
• 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.  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.
• On April 28, 2009, DocMagic notified Ellie Mae that it was opting to end its Reseller Agreement with Ellie Mae.
• On May 21, 2009, DocMagic was informed that Ellie Mae had decided not to renew the outdated terms of its ePASS Agreement with DocMagic.  Ellie Mae proposed new terms for their agreement with DocMagic; however, DocMagic did not respond.
• On August 19, 2009, 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.
• On August 28, 2009, ten days after sending DocMagic the aforementioned notice of breach and copyright violation, DocMagic surprised Ellie Mae with lawsuits and notified Ellie Mae that it would abruptly cease servicing document orders from their mutual customers on August 31, 2009.  This caused disruption to mutual customers and was unnecessary, since the Reseller Agreement between Ellie Mae and DocMagic had provided for a 60-day orderly transition period during which Encompass users could still place document orders with DocMagic. 

Comments from Jonathan Corr, chief strategy officer at Ellie Mae:

“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.  We are prepared to assist any customers who are affected, and are proactively working to minimize any inconveniences that DocMagic’s actions may be causing our mutual customers.”

“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.  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. While we sincerely appreciate the services DocMagic provided to our mutual customers over the years, our customers’ business interests are our highest priority.”

“We have invested years of research and development into our patented ePASS technology, which has provided immeasurable efficiencies to the mortgage industry.  It is not DocMagic’s or anyone’s right to reverse-engineer technology or to access it illegitimately.” 

Ellie Mae said it will respond to DocMagic’s specific allegations in the appropriate legal forum.  Encompass customers who were previously using DocMagic’s solutions may get assistance from Ellie Mae by calling (800) 444-3627.

About Ellie Mae, Inc.
Ellie Mae is an award-winning provider of software and services for the mortgage industry, offering comprehensive business solutions for mortgage bankers, mortgage brokers and lenders. The company's key offerings include the flagship Encompass^® Mortgage Management Solution, Encompass CenterWise™ websites and electronic document management, and Encompass Closer document preparation services. More than 100,000 mortgage professionals use the Encompass Mortgage Management Solution. A recipient of the prestigious Inman Award as the most innovative company in the mortgage industry and acknowledged as a top technology service provider by Mortgage Technology, Ellie Mae is recognized for developing technology that links the many parties critical to the mortgage origination industry through its patented ePASS^® technology. One quarter of the nation's more than $2 trillion in new mortgages originated every year pass through Ellie Mae’s ePASS technology, enabling mortgage companies to easily and securely conduct electronic business transactions with dozens of leading lenders and thousands of settlement service providers.  Ellie Mae was founded in 1998 and is based in Pleasanton, California. To learn more about Ellie Mae, visit www.EllieMae.com or call (877) 355-4362.

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© 2009 Ellie Mae, Inc. All rights reserved. Ellie Mae, Encompass, and ePASS (patent Nos. 7,444,302 and 7,472,089) are registered trademarks and Encompass CenterWise and Encompass Closer are trademarks of Ellie Mae, Inc. in the United States.