|Two major players in the mortgage loan technology business are locked in a legal battle over a copyright dispute. However, a major development in the case last week has left the lawsuit in limbo.
In May, Calyx Software, a San Jose, Calif., maker of loan origination software, filed for a preliminary injunction against rival Ellie Mae of Dublin, Calif.
Calyx said in a written statement that it filed the federal lawsuit in the Northern District of California "to stop further sales and distribution of Ecompass," a software program made by Ellie Mae.
Calyx alleges that Ellie Mae's Encompass infringes on the structure, user interface and "look and feel" of Calyx's Point software.
"We feel we have to protect the value we have created," Dennis Boggs, senior vice president of business development for Calyx, said in the statement.
But then last week Calyx abruptly withdrew the request for preliminary injunction. In a statement, Calyx said it did so "to obtain discovery from Ellie Mae."
"Calyx specifically reserves the right to refile the request for preliminary injunction relief in the future," the company said.
In a phone interview late last week with Bob Visini, vice president of marketing for Ellie Mae, predicted the suit would be at least temporarily withdrawn.
The company denies it copied Calyx's product, he said.
"This thing will be coming to head very soon," Visini said. He said he could not comment further.
But a lawyer representing Calyx said settlement talks were pursued without success.
"We attempted to resolve the matter amicably, but an agreement could not be reached," Jon Redway, an intellectual property specialist with White, Redway & Brown LLP, said in the Calyx statement.
Mortgage loan offices use Point and Encompass to process loan packages from consumers.
Calyx said in a January press release that sales of Point -- which it described as the company's "flagship product"-- doubled from 1,893 new licenses compared to 760 in January of 2003.
As of January the number of Point users totaled "an unprecedented" 34,300, Calyx said in the press release.
Calyx filed the lawsuit against Ellie Mae "in order to protect our intellectual property," Boggs said.
"We put a great deal of work into developing the user interface in all of our software products," Boggs said. "We have seen on Ellie Mae's Internet web site that they have acknowledged to the press that they copied the look and feel of Point.
"Our contention is that they went a lot further than that," Boggs said. "There is much more to User Interface...design than simply laying out fields on a screen. The relationship and the exchange of data between fields, and the flow of data from one screen to another are examples. Those as well as the screens themselves are at stake here."
Ellie Mae is scheduled to release a new version of Encompass in July. It is unclear how the legal fight will affect the product rollout, both companies said.