Neither Snow nor Rain nor Warmth nor Gloom of Night time . . . Will Cease the US Postal Service from Stealing Its Contractor’s Commerce Secrets and techniques?

It is no secret that the US Postal Service (USPS) has been struggling financially for nicely over a decade. One technique of combatting its struggles has been to contract with third-party resellers to market USPS companies and drive prospects to it. Certainly, simply a type of resellers, Specific One, delivered over $3 billion in income to the USPS previously 12 months alone. Though the annual working price range of the USPS is $77 billion, $3 billion remains 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 apparently stole Specific One’s commerce secrets and techniques to create its personal competing e-commerce enterprise and minimize Specific One out. That might find yourself costing the USPS greater than $500 million in damages, plus injunctive reduction, if Specific One can show wrongdoing.

In keeping with a 42-page criticism it filed within the US District Courtroom 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]he USPS devised a plan by which it might persuade Specific One to share its confidential buyer, pricing and enterprise data with the USPS in order that the USPS might develop its personal competing platform. The final word aim 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. To be able 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, comply with a brand new contract, and share its confidential buyer, pricing and enterprise data with the USPS.

In Might 2022, the USPS introduced the launch of a brand new e-commerce platform referred to as “USPS Join eCommerce” and promptly terminated its relationship with Specific One. In keeping with Specific One, the USPS’s conduct, “if allowed to face, is not going to solely price Specific One a whole bunch of tens of millions of {dollars} in damages, however will pressure 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. , it additionally asserts a declare for “Misappropriation of Commerce Secrets and techniques – Constitutional Takings,” which, in fact, might solely be introduced towards the federal government and implicates the takings clause of the Fifth Modification of the US Structure (“nor shall personal 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 reduction prohibiting the USPS from terminating its contract with Specific One and misappropriating its confidential and proprietary enterprise data. In one other attention-grabbing 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 facet to the dispute. Amongst different issues, the PAEA prohibits the USPS from:

(1) set up[ing] any rule or regulation (together with any commonplace) the impact of which is to preclude competitors or set up the phrases of competitors until the Postal Service demonstrates that the regulation doesn’t create an unfair aggressive benefit for itself or any entity funded (in entire or partially ) by the Postal Service;

(2) compel[ling] the disclosure, switch, or licensing of mental property to any third social gathering (reminiscent of patents, copyrights, logos, commerce secrets and techniques, and proprietary data); or

(3) receive[ing] data from an individual that gives (or seeks to offer) any product, after which provide[ing] any postal service that makes use of or is predicated in entire or partially on such data, with out the consent of the individual offering that data, until considerably the identical data is obtained (or obtainable) from an impartial supply or is in any other case obtained (or obtainable) .

This lawsuit is certain to ship some fascinating takeaways because it progresses, particularly 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 keep watch over it and report again with any materials updates.