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DocMagic Expands Lawsuit Against Ellie

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After reviewing Ellie Mae’s registration statement, DocMagic Inc. has expanded its lawsuit against the mortgage technology provider. DocMagic claims the public filing shows how Ellie has profited by stealing DocMagic’s intellectual property.

An amended complaint was filed in U.S. District Court for the Northern District of California on Monday by Carson, Calif.-based DocMagic, according to a copy of the filing provided by DocMagic — which claims to be “the largest loan document production company in the U.S.”

In its original complaint filed in August 2009, DocMagic claims Ellie terminated it from the ePASS Network and “took drastic steps to prevent hundreds of current DocMagic/Encompass users from accessing DocMagic products through unfair and anticompetitive behaviors, including sabotaging its clients by preventing access to DocMagic through alternative (non-ePASS) Web service calls.”

DocMagic said its amended complaint significantly expands the allegations and claims initially made against the Pleasanton, Calif.-based technology service provider. Additional claims under the Lanham Act included unfair competition, false advertising and copyright infringement. Other claims were added for trade secret misappropriation, a request for a declaratory judgment that DocMagic didn’t infringe upon Ellie’s copyrights and that Ellie has no claim to the ownership of its client’s loan data.

Ellie, through a spokeswoman, said it cannot comment because it is in a quiet period leading up to its initial public offering, which was disclosed in a FORM S-1 filing with the Securities and Exchange Commission on April 30.

But DocMagic President and Founder Dominic Iannitti was in no quiet period.

“Now that we have had the opportunity to review Ellie Mae’s financial performance in its IPO Prospectus filed with the Securities Exchange Commission, it appears that the only financial success Ellie Mae can claim in the last two years is tied directly to the document preparation business, much of which is based on business and intellectual property stolen from DocMagic and others in violation of federal and state laws,” Iannitti said in the statement. “The more we discover about their conduct, the more compelled we are to make sure that the full scope and breadth of it is brought under scrutiny.”

DocMagic Inc., a California corporation, Plaintiff, v. Ellie Mae Inc., a Delaware corporation, Defendant.
Case No. CV 09 4017, Aug. 28, 2009 (U.S. District Court for the Northern District of California).

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