It is no secret that the US Postal Service (USPS) has been struggling financially for properly over a decade. One technique of preventing its struggles has been to contract with third-party resellers to market USPS providers and drive clients to it. Certainly, solely a kind of resellers, Specific One, delivered over $3 billion in income to the USPS up to now 12 months alone. Though the annual working price range of the USPS is $77 billion, $3 billion continues to be actual cash—particularly because the USPS suffered losses of $6.9 billion final 12 months.
The USPS apparently doesn’t ascribe to the idiom “do not chunk the hand that feeds you,” because it allegedly stole Specific One’s commerce secrets and techniques to create its personal competing e-commerce enterprise and lower Specific One out. That would find yourself costing the USPS greater than $500 million in damages, plus injunctive aid, if Specific One may show wrongdoing.
Based on a 42-page criticism it filed within the US District Court docket in Utah, Specific One was the primary reseller to contract with the USPS in 2009, and “[o]ver the final 13 years, Specific One has invested a large period of time, effort and assets establishing relationships with its platform companions and constructing its reseller enterprise, to the exclusion of different enterprise alternatives.” In 2019, nonetheless, Specific One alleges that the USPS determined to steal its commerce secrets and techniques and use them to arrange a competing e-commerce platform:
[T]the USPS devised a plan by which it will persuade Specific One to share its confidential buyer, pricing and enterprise data with the USPS in order that the USPS may develop its personal competing platform. The last word objective was to implement a competing USPS platform, terminate the reseller program, together with Specific One’s reseller contract, and take management of Specific One’s enterprise and revenue margin. With the intention to execute that plan, the USPS made quite a few guarantees and misrepresentations to Specific One to induce Specific One to belief the USPS, proceed investing in and constructing its reseller community, conform to a brand new contract, and share its confidential buyer, pricing and enterprise data with the USPS.
In Could 2022, the USPS introduced the launch of a brand new e-commerce platform referred to as “USPS Join eCommerce” and precipitously terminated its relationship with Specific One. Based on Specific One, the USPS’s conduct, “if allowed to face, is not going to solely price Specific One a whole lot of thousands and thousands of {dollars} in damages, however will drive the corporate out of enterprise altogether.”
Specific One asserts claims for breach of contract, fraudulent inducement, and commerce secret misappropriation beneath the Defend Commerce Secrets and techniques Act and the Utah Uniform Commerce Secrets and techniques Act, amongst different issues. Curiously, it additionally asserts a declare for “Misappropriation of Commerce Secrets and techniques – Constitutional Takings,” which, after all, may solely be introduced towards the federal government and implicates the takings clause of the Fifth Modification of the US Structure (“nor shall non-public property be taken for public use, with out simply compensation”).
Specific One is in search of damages in extra of $500 million, in addition to declaratory and/or injunctive aid prohibiting the USPS from terminating its contract with Specific One and misappropriating its confidential and proprietary enterprise data. In one other fascinating twist, Specific One additionally seeks a declaration and/or injunction prohibiting the USPS from partaking in unfair competitors in violation of the federal Postal Accountability and Enhancement Act of 2006 (PAEA). The PAEA solely applies to the USPS, and the declare provides one other noteworthy side to the dispute. Amongst different issues, the PAEA prohibits the USPS from:
(1) established[ing] any rule or regulation (together with any customary) the impact of which is to preclude competitors or set up the phrases of competitors except the Postal Service demonstrates that the regulation doesn’t create an unfair aggressive benefit for itself or any entity funded (in complete or partially ) by the Postal Service;
(2) compel[ling] the disclosure, switch, or licensing of mental property to any third celebration (similar to patents, copyrights, emblems, commerce secrets and techniques, and proprietary data); or
(3) acquire[ing] data from an individual that gives (or seeks to offer) any product, after which provides[ing] any postal service that makes use of or relies in complete or partially on such data, with out the consent of the individual offering that data, except considerably the identical data is obtained (or obtainable) from an impartial supply or is in any other case obtained (or obtainable) .
This lawsuit is bound to ship some fascinating takeaways because it progresses, specifically as a result of the alleged wrongdoer is a federal company and the plaintiff asserts claims beneath the Fifth Modification and the PAEA. We are going to regulate it and report again with any materials updates.