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DealerTrack Lawsuit Expected to Go to Trial in July

April 14, 2008

Santa Ana, Calif. – A U.S. District Court Judge denied a motion brought by RouteOne for partial summary judgment of invalidity of one of three patents involved in the patent-infringement lawsuit filed by DealerTrack against RouteOne and Finance Express.

The March 28 ruling by Judge Andrew Guilford of the U.S. District Court for the Central District of California means that the invalidity issue raised by RouteOne’s motion must be decided by a jury rather than summarily by the court. Each side can still file additional summary motions before the four-year lawsuit goes to jury trial on July 22.

“The court’s ruling is very positive for us,” said Mark O’Neil, DealerTrack chairman and CEO. “RouteOne’s early motion for summary judgment was their best shot at invalidating this patent. We have always believed that RouteOne’s argument was weak, and the court’s ruling strongly supports this belief. Based on that decision, DealerTrack is free to pursue its claims against RouteOne and Finance Express for infringing on all three of our valid patents.”

RouteOne’s request for partial summary judgment was made during a hearing on Sept. 25, 2007. It charged that the Patent Examiner was wrong in its March 2007 decision to allow DealerTrack’s patent, which was issued last February, to carry the filing date of an earlier-filed patent.

According to court filings, RouteOne argued that the language contained in a patent filed in September 1995 did not support the “lender-to-lender functionality” claimed by DealerTrack’s most recently issued patent — which was filed in September 1997.

The court, however, held that “there remains a genuine issue of material fact under the standards applicable to this summary judgment motion about whether” the earlier patent supports DealerTrack’s recently filed patent.

“While we are disappointed in the court’s decision, the court simply denied our motion for summary judgment but did not rule against our defense, which we will be presenting to the jury at trial,” said Mike Jurecki, RouteOne CEO.

DealerTrack first filed its lawsuit against RouteOne on Jan. 28, 2004, charging the company with infringing on two of its patents after RouteOne launched its Web-based credit application management system in 2003. DealerTrack later filed a similar suit against Finance Express and its president David Huber. Finance Express responded shortly thereafter by filing counterclaims against DealerTrack.

DealerTrack later filed a joint lawsuit against RouteOne and Finance Express on Oct. 27, 2006, after the two companies partnered together. The two companies responded with their own counterclaims.

“As we have always maintained, we believe that the RouteOne system does not infringe any valid claim of any DealerTrack patent,” said RouteOne’s Jurecki. “We will continue to defend ourselves vigorously in this case and are confident that we will prevail. We will continue to operate our business as we always have, and remain fully committed to the growth and progress of the RouteOne platform.”

On April 1, 2008, RouteOne amended its counterclaims in the case to add charges of inequitable conduct against DealerTrack, asserting that material information concerning prior art was withheld by DealerTrack from the Patent Office during the prosecution of the most recent DealerTrack patent application. If proved at trial, RouteOne’s inequitable conduct claims would render the patent unenforceable.

Finance Express also filed more counterclaims against DealerTrack on March 31, 2008, charging the technology services provider with claims related to breach of contract, misappropriation of trade secrets, and unfair competition.

“We’ve known from the beginning that this is not about patent infringement,” said David Huber, president of Finance Express. “DealerTrack simply filed litigation against Finance Express as a harassment lawsuit, trying to harass a smaller company and trying to put us out of business. And the counterclaims we have against DealerTrack we believe are very strong and are very accurate and will be prosecuted vigorously throughout the trial.”

Commenting on the counterclaims, O’Neil said: “Like all of RouteOne’s and Finance Express’s counterclaims, we believe that their new arguments against the enforceability of DealerTrack’s patent are without merit. We see these counterclaims as little more than attempts to throw something at the wall to see if it sticks. I believe we will prevail in defending our intellectual property rights against infringement and in showing that the counterclaims are baseless. We look forward to the trial.”

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