LAS VEGAS - DealerTrack Inc. has filed a patent infringement lawsuit in federal court against its newest competitor, RouteOne LLC, the joint venture company created by the captive finance companies of the Big 3.
Both companies offer dealers the ability to submit credit applications for their customers to lending institutions via a Web-based system.
RouteOne began a phased launch of its service on Nov. 3 for dealerships that use Ford Motor Credit Co. and General Motors Acceptance Corp.
The DealerTrack lawsuit was filed Jan. 28, just three days before the start of the National Automobile Dealers Association convention here, the most important show of the year for both companies.
"Obviously, we're very cynical about what their motive is with the timing of this whole thing," says Mike Jurecki, RouteOne CEO.
RouteOne, in Southfield, Mich., was created in January 2002 by Ford Credit, GMAC, and DaimlerChrysler Services. Toyota Financial Services joined the Big 3 captive finance companies as a partner the following June.
DealerTrack, of Melville, N.Y., has been offering its service to dealers since February 2001 and has developed additional Web-based products since then.
DealerTrack offers dealers the ability to transmit an e-contract to a financial institution, eliminating the need to complete a paper contract.
The lawsuit asks the federal court to order RouteOne to stop infringing on two DealerTrack patents that cover processes related to automated credit application analysis and decision making.
DealerTrack CEO Mark O'Neil dismissed the notion that his company is trying to undermine RouteOne's marketing efforts at the NADA convention.
"There's no good time to do a lawsuit," O'Neil says.
"RouteOne's system has only been in the market for a few weeks. We reacted as quickly as we could when we had accurate data that the infringements had occurred."
Because of the pending litigation in a federal court in New York, O'Neil declined to talk more specifically about the patents in question.
DealerTrack says that 90 percent of new-car franchised dealers use its Web-based services to connect with more than 60 financing sources.
RouteOne's Jurecki contends that DealerTrack has known of RouteOne's business plans since early 2002.
RouteOne will continue with its rollout plans, he says. DaimlerChrysler Services and Toyota Financial are expected to join the RouteOne system in March.
Jurecki, former director of operations at Ford Credit, says that DealerTrack never approached RouteOne with any concerns about patents.
Jurecki says: "We have done our homework. They are trying to disrupt our launch and everything that goes with that. It's unfortunate."