Not that home builders or product manufacturers needed any more bad news, but they got a heaping helping of it late Wednesday when The Clearman Law Firm of Houston, Texas, launched a federal lawsuit against many of the home building industry’s leading companies.

The suit, filed in U.S. District Court in Marshall, Texas, alleges that a number of the companies being sued agreed to confidentiality agreements before being introduced to new Web-based application called “Builder’s On-Line Assistant” by OLA, a Chicago-based technology company.

The suit contends that the companies declined to purchase the Web application from OLA, instead forming their own competing company, Builder Homesite, that in 2005 started marketing a similar product, now widely used by builders and known as “Envision.”

OLA, in 2000, applied for patents covering the product it was pitching builders. OLA received related patents in 2006 and 2007, Clearman Law Firm alleges in a statement announcing the lawsuit.

The suit charges that after receiving positive feedback from several home builders and manufacturers about “Builder’s On-Line Assistant,” OLA revealed detailed information about its methods and service. OLA did this under the condition that they had confidentiality agreements with the builders and manufacturers.

“The defendants obviously saw the benefit in OLA’s idea, but they apparently didn’t think they needed the company’s permission to use its patents or that they needed to honor their agreements,” Scott Clearman, lead counsel for OLA, said in a statement. “It’s hard for me to believe that these huge companies didn’t know what they were doing when they basically copied our client’s process verbatim and began marketing it themselves, let alone for a consortium to collaborate to do so.”

Charges levied in the suit include trade secret theft, fraud, patent infringement, and violation of antitrust laws as well as confidentiality agreements.

Home builders named in the suit include: Beazer Homes USA, Capital Pacific Holdings, Centex Real Estate Corp., David Weekley Homes, KB Home, Lennar Corp., Pulte Homes, Standard Pacific Corp., and Toll Brothers.

Lennar and Pulte declined to comment, citing company policy that they do not comment on pending litigation.

David Weekley Homes just heard about the suit, and is researching it, John Burchfield, general counsel for Weekley, told BUILDER today.

Also named as defendants are home products manufacturers, including: Georgia-Pacific Corp., Hearth & Home Technologies, Honeywell International, Kohler, Masco Corp., Overhead Door Corp., Owens Corning, Progress Lighting Inc., Square D Company, Therma-Tru Corp., Weyerhaeuser Co., Whirlpool Corp., and York International Corporation.

BUILDER will continue to follow this story, providing updates as the news develops.

Ethan Butterfield is senior editor, business, at BUILDER magazine.

Learn more about markets featured in this article: Chicago, IL.