The nearly three-year-long legal battle between Ellie Mae and DocMagic may be close to a resolution, according to recently filed court documents.
Following court-ordered mediation in August 2011, Ellie Mae and DocMagic recently told the U.S. District Court for the Northern District of California that they intend to settle both DocMagic’s initial lawsuit and Ellie Mae’s subsequent countersuit.
“The parties are currently in the process of finalizing documentation of a settlement agreement reached during mediation…Finalizing the settlement documents has taken longer than expected, but the parties continue to negotiate in good faith and anticipate that the settlement will be finalized,” the joint filing reads.
Judge Edward Chen granted the parties’ request to postpone a case management conference until June and canceled a series of pretrial deadlines.
Representatives from both companies declined to comment for this story.
The ongoing case between Carson, Calif.-based document preparation vendor DocMagic and Pleasanton, Calif.-based loan origination system vendor Ellie Mae has amounted to a modern-day mortgage technology version of the Hatfield-McCoy feud.
DocMagic’s claims stem from an agreement the two companies had to private label DocMagic’s technology as Ellie Mae Docs. After Ellie Mae acquired Online Documents Inc. from Stewart Lender Services in October 2008, it began working on creating its own technology for Ellie Mae Docs instead of using the private-labeled DocMagic technology.
But DocMagic claims that rather than using the Online Documents Inc. technology, Ellie Mae illegally used DocMagic’s intellectual property to build its own doc prep system.
The companies also had an agreement that allowed lenders to access DocMagic’s software through a direct integration with Ellie Mae’s Encompass LOS. In the throes of the Ellie Mae Docs dispute, DocMagic claims Ellie Mae terminated the agreement and would only allow DocMagic to integrate with Encompass if it paid an increased transaction fee of $6, which DocMagic said amounted to a 600% increase from the contract’s original fee.
In its initial August 2009 lawsuit and subsequent amended complaints, DocMagic alleges that Ellie Mae breached contracts and violated federal antitrust, copyright and trademark laws.
In its counterclaim, Ellie Mae denies that it illegally used DocMagic’s intellectual property to develop the new version of Ellie Mae Docs. Ellie Mae also claims that the $6 transaction fee is the standard rate that all doc prep vendors pay to integrate with Encompass and that DocMagic had been paying a heavily discounted rate.
