Mortgage technology suit costs lender near $6 million
Mortgage Technology Suit Costs Lender Near $6 MillionIMX Inc. was awarded the judgment against online mortgage originator LendingTree.
But Charlotte, N.C.-based LendingTree, which didn’t respond to MortgageDaily.com’s request for a statement, has indicated that it will ask the court to set aside the verdict and, if necessary, appeal.
“IMX is extremely pleased with the jury verdict and believes that the jury made the proper decision. The case proved IMX’s allegations to be true from the very beginning that LendingTree was willfully infringing its intellectual property and IMX took the steps necessary to stop that from happening,” said Bill Goldman, IMX’s attorney.
“This case will have no meaningful effect on how our lenders and customers interact with LendingTree,” said Tom Reddin, chief executive officer of LendingTree’s parent IAC Financial Services and Real Estate, in a written statement. “The patent does not go to the heart of the LendingTree proposition and, if the verdict were to be upheld, LendingTree could easily design around it without impact to either the consumer or lender experience.”
“The claims in which LendingTree was found to infringe related to a system and method for operating a real-time Internet exchange where borrowers and lenders exchange information in the pursuit of a loan,” explained Michele Buschman, IMX’s acting CEO. “A borrower’s loan request is maintained by the system and both borrowers and lenders have real-time access to this information, permitting lenders to review borrowers’ loan requests and make offers on loan requests of interest, and permitting borrowers to accept or reject lenders’ offers via the exchange.”
Goldman, a partner with DLA Piper Rudnick Gray Cary US LLP, said LendingTree argued that it wasn’t infringing the patent because the company wasn’t taking loan applications. “That’s what the whole case boiled down to, whether or not they were deemed to be taking loan applications,” Goldman said. But the jury saw it differently than LendingTree, concluding that the form used by the company on its site met the court standard for a loan application because it contained sufficiently detailed information to allow a lender to make a decision upon request. Goldman said IMX’s patent covers that type of architecture and technique. “That’s what was accused — the heart of LendingTree’s business,” Goldman said.
Goldman also noted that because LendingTree, which provides access to mortgages, refinance loans, home equity loans and lines of credit and other loans via its Web site, was found to have committed “willful infringement,” the judge in the case has the option of tripling the damages award and also awarding attorney’s fees.
Buschman was quick to point out that her company was not interested in litigating the matter because, at one time, IMX was exploring a business partnership with LendingTree. “But we needed to protect our investors and our company,” she said. The lawsuit was filed in November 2003.
Goldman said IMX has asked the court to grant a permanent injunction against LendingTree to stop further infringement of IMX’s patent.