By It is no secret that the US Postal Service (USPS) has been struggling financially for properly over a decade. One technique of combatting its struggles has been to contract with third-party resellers to market USPS companies and drive clients to it. Certainly, simply a kind of resellers, Categorical One, delivered over $3 billion in income to the USPS up to now 12 months alone. Though the annual working finances of the USPS is $77 billion, $3 billion continues to be actual cash—particularly for the reason that USPS suffered losses of $6.9 billion final yr.
The USPS apparently doesn’t ascribe to the idiom “do not chew the hand that feeds you,” because it apparently stole Categorical One’s commerce secrets and techniques to create its personal competing e-commerce enterprise and reduce Categorical One out. That would find yourself costing the USPS greater than $500 million in damages, plus injunctive aid, if Categorical One can show wrongdoing.
In keeping with a 42-page criticism it filed within the US District Court docket in Utah, Categorical One was the primary reseller to contract with the USPS in 2009, and “[o]ver the final 13 years, Categorical One has invested a large period of time, effort and sources establishing relationships with its platform companions and constructing its reseller enterprise, to the exclusion of different enterprise alternatives.” In 2019, nevertheless, Categorical 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 will persuade Categorical One to share its confidential buyer, pricing and enterprise info with the USPS in order that the USPS might develop its personal competing platform. The last word objective was to implement a competing USPS platform, terminate the reseller program, together with Categorical One’s reseller contract, and take management of Categorical One’s enterprise and revenue margin. With the intention to execute that plan, the USPS made quite a few guarantees and misrepresentations to Categorical One to induce Categorical 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 info 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 Categorical One. In keeping with Categorical One, the USPS’s conduct, “if allowed to face, is not going to solely value Categorical One tons of of thousands and thousands of {dollars} in damages, however will power the corporate out of enterprise altogether.”
Categorical One asserts claims for breach of contract, fraudulent inducement, and commerce secret misappropriation below 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, after all, might solely be introduced in opposition to 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”).
Categorical 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 Categorical One and misappropriating its confidential and proprietary enterprise info. In one other attention-grabbing twist, Categorical 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 partly ) by the Postal Service;
(2) compel[ling] the disclosure, switch, or licensing of mental property to any third occasion (reminiscent of patents, copyrights, logos, commerce secrets and techniques, and proprietary info); or
(3) get hold of[ing] info from an individual that gives (or seeks to supply) any product, after which provide[ing] any postal service that makes use of or is predicated in entire or partly on such info, with out the consent of the particular person offering that info, until considerably the identical info is obtained (or obtainable) from an unbiased 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 below the Fifth Modification and the PAEA. We are going to keep watch over it and report again with any materials updates.