IMX Inc.'s victory last week in a patent suit against LendingTree LLC may be only the first round in a long fight over exchange-enabling technology.
The U.S. District Court for Delaware awarded $5.8 million of damages to IMX, a Houston company that runs an online exchange for brokers and wholesalers. IMX said it hopes Judge Sue L. Robinson will grant an injunction to stop LendingTree's patent infringement.
Mortgage brokers use IMX Exchange to submit borrower applications to lenders to get product and price information, as well as approval to do business with participating lenders. Several similar exchanges have come and gone since they emerged in the late 1990s. Today IMX's rivals include Metavante Corp.'s GHR Systems Inc.
Consumers use LendingTree, a Charlotte unit of IAC/InterActiveCorp, to submit their own applications and automatically receive offers from up to four lenders.
Since 1999, IMX has held a patent covering the details of how applications submitted to an exchange are matched with lenders.
Michele Buschman, IMX's vice president of operations and its acting chief executive, said in an interview that her company, which was founded in 1997, has survived because it was "an innovator."
She noted that Mortgage Technology magazine, a sister publication to American Banker, has named one of its annual awards after IMX's founder, the broker Steve Fraser.
"We're really proud to say that we're the only exchange that survived the dot-com bust," Ms. Buschman said. "We say, 'We were the first, and we're still here.' "
The two-week IMX-LendingTree trial ended Jan. 23. The next day LendingTree told American Banker that it was "disappointed with the jury's verdict."
LendingTree also said it would ask Judge Robinson to set aside the jury's decision and will appeal the verdict, if necessary. "This case will have no meaningful effect on how our lenders and customers interact with LendingTree."
In a subsequent press release, LendingTree said IMX's 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."
Ms. Buschman said IMX pursued the case even though LendingTree deals with a different type of customer because "we've had a lot of wonderful companies invest in our company," and "we wanted to protect their interest."
On its Web site, IMX says its investors include ABN Amro Holding NV, BancBoston Ventures Inc. (now part of Bank of America Corp.), Citigroup Inc., Hummer Winblad Venture Partners LP, Intel Corp., Lehman Brothers, Mohr Davidow Ventures, and Piper Jaffray Ventures.
