62290 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Rules and Regulations 

1Notice of Proposed Rulemaking Establishing 

Rules Pursuant to 39 U.S.C. 404a, June 5, 2013 

(Order No. 1739). 2Public Representative Comments, July 29, 2013 

(PR Comments), Public Representative Reply 

Comments, August 28, 2013 (PR Reply Comments). 3 Initial Comments of the United States Postal 

Service, July 29, 2013 (Postal Service Comments), 

Reply Comments of the United States Postal 

Service, August 28, 2013 (Postal Service Reply 

Comments). 4 Joint Comments of Stamps.com and Endicia, 

July 29, 2013 (Stamps.com and Endicia Comments), 

Joint Reply Comments of Stamps.com and Endicia, 

August 28, 2013 (Stamps.com and Endicia Reply 

Comments). 

5 Valpak Direct Marketing Systems, Inc. and 

Valpak Dealers’ Association, Inc. Initial Comments 

on Notice of Proposed Rulemaking, July 29, 2013 

(Valpak Comments), Valpak Direct Marketing 

Systems, Inc. and Valpak Dealers’ Association, Inc. 

Reply Comments on Notice of Proposed 

Rulemaking, August 28, 2013 (Valpak Reply 

Comments). 

6Comments of Time Inc. in Response to Order 

No. 1739, July 29, 2013 (Time Comments), Reply 

Comments of Time Inc. Regarding Order No. 1739 

(Time Reply Comments). Concurrent with its reply 

comments, Time Inc. filed a Motion of Time Inc. 

for Acceptance of Late Filing on August 29, 2013. 

That motion is granted. 

7Frederick Foster’s Opinion on the PRC Notice of 

Proposed Rulemaking Establishing Rules Pursuant 

to 39 U.S.C. 404a, July 19, 2013 (Foster Comments). 

8 Initial Comments of the International Digital 

Enterprise Alliance, Inc. (IDEAlliance), July 29, 

2013 (IDEAlliance Comments). 

9 Initial Comments of United Parcel Service in 

Response to Notice of Proposed Rulemaking 

Establishing Rules Pursuant to 39 U.S.C. 404a, July 

29, 2013 (UPS Comments). 

10Comments of Pitney Bowes, Inc., July 29, 2013 

(Pitney Bowes Comments). 

11 Valassis Direct Mail, Inc., July 29, 2013 

(Valassis Comments). 

12Comments of the National Association of 

Presort Mailers, July 29, 2013 (NAPM Comments). 

13Comments of Grayhair Software, Inc., July 29, 

2013 (Grayhair Software Comments). 

14Reply Comments of the Newspaper Association 

of America, August 28, 2013 (NAA Reply 

Comments). 

POSTAL REGULATORY COMMISSION 

39 CFR Part 3032 

[Docket No. RM2013–4; Order No. 2207] 

Restrictions on Unfair Competition 

AGENCY: Postal Regulatory Commission. 

ACTION: Final rule. 

SUMMARY: The Commission is issuing a 

set of final rules that enhance the formal 

complaint process in cases involving 

alleged violations of a law that prohibits 

the Postal Service from taking certain 

actions that might provide it with unfair 

competitive advantages. The rules 

implement the statutory prohibitions on 

unfair competition. Relative to the 

proposed rules, some of the changes are 

substantive and others are minor and 

non-substantive. Proposed rules of a 

procedural nature were either removed 

or modified. 

DATES: Effective November 17, 2014. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: Regulatory 

History: 78 FR 35826, June 14, 2013. 

Table of Contents 

I. Introduction 

II. Substantive Rules 

III. Section-by-Section Analysis 

IV. Ordering Paragraphs 

I. Introduction 

On June 5, 2013, the Commission 

issued a notice of proposed rulemaking 

to promulgate implementing regulations 

for 39 U.S.C. 404a.1 Section 404a 

prohibits the Postal Service from certain 

anticompetitive behaviors, and permits 

any person to file a complaint with the 

Commission if that person believes the 

Postal Service has violated the section. 

Order No. 1739 contained proposals for 

both substantive rules relating to the 

standards by which complaints under 

section 404a are adjudicated and 

procedural rules accessible to only 

complaints that allege a violation of 

section 404a. 

The Commission received comments 

and reply comments from: The Public 

Representative,2 the Postal Service,3

Stamps.com and Endicia (jointly),4

Valpak Direct Marketing Systems, Inc. 

and Valpak Dealers Association, Inc.,5

and Time Inc.6 Frederick Foster,7

IDEAlliance,8 United Parcel Service,9

Pitney Bowes,10 Valassis Direct Mail,11

National Association of Presort 

Mailers 12 and Grayhair Software, Inc.13

only filed initial comments. The 

Newspaper Association of America only 

filed reply comments.14

Overall the rules relating to the 

substantive implementation of section 

404a were significantly less 

controversial than those creating 

procedures applicable only for 404a 

complaints. The Commission finds it 

appropriate to bifurcate action on the 

proposed rules. Pursuant to 39 U.S.C. 

404a(b), this Order adopts substantive 

rules relating to the implementation of 

section 404a, but defers consideration of 

procedural rules to later proceedings. 

The Commission plans consideration of 

changes to the procedural rules 

governing all complaints before the 

Commission, and has determined that it 

is not appropriate at this time to create 

procedural rules only applicable to 

complaints alleging Postal Service 

violations of section 404a. As such, the 

Commission does not offer final rules 

for 39 CFR part 3032, subpart C, nor part 

3033 accelerated procedures for 

complaints alleging violations of 39 

U.S.C. 404a. 

The remainder of this Order is 

comprised of two sections. The first 

identifies each substantive rule to be 

implemented and discusses any issues 

or comments. The second provides a 

section-by-section analysis of the final 

rules with a description of any changes 

from the proposed rules. The full text of 

the final rules is set forth below. 

II. Substantive Rules 

In this section, each substantive rule 

that will be finalized is identified, 

briefly outlined, and comments or 

issues relating to the rule are discussed 

and analyzed. 

A. Rule 3032.1 Applicability 

Proposed rule 3032.1 identifies how 

the standards and rules that follow in 

part 3032 are applied. Specifically, it 

states that complaint proceedings filed 

under 39 U.S.C. 3662 for alleged Postal 

Service violations of 39 U.S.C. 404a are 

governed by the substantive standards 

set forth in part 3032. 

No comments address proposed rule 

3032.1. However, the Commission 

implements several changes to the 

proposed rule because the proposed rule 

covers both the substantive standards 

appearing in subpart B of part 3032, as 

well as the procedural rules appearing 

in subpart C of part 3032 and all of part 

3033. The final rule removes references 

to those procedural rules. 

B. Rule 3032.5 Unfair Competition 

Proposed rule 3032.5 implements 

section 404a(a)(1). It lists the elements 

that a complainant must show to bring 

a complaint that the Postal Service has 

violated 39 U.S.C. 404a(a)(1). 

Specifically, a valid complaint requires 

that the Postal Service have a rule, 

regulation, or standard that precludes 

competition or establishes the terms of 

the competition. It further requires that 

the rule, regulation, or standard harms 

or harmed the person filing the 

complaint and competition. The rule 

offers an affirmative defense available to 

the Postal Service, namely that it may 

demonstrate the rule at issue does not 

create an unfair competitive advantage 

for itself or any entity it funds. Finally, 

the rule defines terms (rule, regulation, 

or standard) to include other actions or 

edicts issued by the Postal Service that 

have the effect of a rule, regulation, or 

standard. At the outset, the Public 

Representative notes that the title of the 

rule is not clear. Public Representative 

Comments at 5, n.5. Unfair Competition 

is a broader concept than the rule itself. 

Therefore, the Commission finds it 

appropriate to alter the title of the rule 

(from Unfair Competition to Postal 

Service Rules that Create an Unfair 


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15 15 U.S.C. 1–38. 

Competitive Advantage). Comments 

address five specific aspects of proposed 

rule 3032.5. 

1. Harm Requirement in 3032.5(a)(2) 

Proposed 3032.5(a)(2) requires that 

the Postal Service’s action harms or 

harmed the person filing the complaint 

and competition. United Parcel Service 

objects to the inclusion of this harm 

requirement because that requirement is 

not present in the statute. UPS 

Comments at 5 (The rule would add 

elements to the complainant’s burden 

that are not currently in the statute.). 

See also Public Representative Reply 

Comments at 9, Stamps.com and 

Endicia Reply Comments at 2, NAA 

Reply Comments at 5. Pitney Bowes 

contends that the proposed harm 

requirement shifts the burden 

improperly away from the Postal 

Service to demonstrate that the rule or 

regulation does not cause harm, and is 

therefore inconsistent with the plain 

language of the statute. Pitney Bowes 

Comments at 2. 

United Parcel Service also notes that 

reading a requirement of harm into the 

rule makes the rule analogous to other 

antitrust and unfair competition 

standards that the Postal Service is 

already subject to by virtue of 39 U.S.C. 

409(e). UPS Comments at 5. 

The Postal Service supports the 

inclusion of the harm requirement as a 

reasonable interpretation of the statute 

and consistent with the legal concept of 

standing. Postal Service Reply 

Comments at 5–7. The Postal Service 

contends that the requirement to show 

harm would limit the number of claims 

that would waste time because no party 

has suffered, nor ever would suffer, any 

harm. Id. at 7. Time, Inc. contends that 

the harm requirement should be read as 

purely jurisdictional, and could be 

broadened to include associations or 

representative bodies of those harmed. 

Time Reply Comments at 8. Time, Inc. 

comments that the harm to competition 

requirement should be read to mean that 

complainant must show how the Postal 

Service’s action precluded competition 

or established the terms of competition. 

Id. at 8–9. 

The Commission agrees with the 

comments that point out the harm 

requirement is not present in the statute. 

The Commission removes the harm 

requirement as a jurisdictional element 

that complainants must demonstrate to 

proceed under the rules. Harm may 

remain a relevant part of a complaint 

alleging a violation of 39 U.S.C. 

404a(a)(1), and could be used to show 

how the Postal Service has established 

the terms of competition or precluded 

competition. It could also be used in the 

Commission’s consideration of an 

appropriate remedy should a complaint 

be sustained. 

The Commission finds that the 

benefits of keeping the harm 

requirement, as articulated by the Postal 

Service, are outweighed by the extrastatutory restrictions it would impose 

upon complainants. The final rule, 

therefore, does not contain a 

requirement that the complainant 

demonstrate harm to himself and 

competition. 

2. Affirmative Defense in 3032.5(b) 

Proposed 3032.5(b) offers the Postal 

Service an affirmative defense that no 

violation has occurred when the Postal 

Service can demonstrate that the rule, 

regulation or standard does not create 

an unfair competitive advantage for 

itself or any entity funded, in whole or 

part, by it. The Public Representative 

proposes that the defense should be 

rebuttable rather than affirmative. 

Public Representative Comments at 5. 

This would mean that even if the Postal 

Service shows that there is a regulatory 

justification for the rule subject to a 

404a complaint, it could nonetheless be 

found in violation of 404a if 

anticompetitive harm outweighs the 

regulatory justification. Id. at 7–8. The 

Public Representative contends that this 

burden-shifting framework is used in 

antitrust litigation under the Sherman 

Antitrust Act of 1890 when applying the 

rule-of-reason analysis. Id. at 6–7. 

Stamps.com and Endicia support the 

Public Representative’s suggestion. 

Stamps.com and Endicia Reply 

Comments at 4–5. 

The Postal Service opposes the 

rebranding of its defense as rebuttable. 

The Postal Service characterizes this 

proposed change as importing 

principles of antitrust law that were not 

envisioned by Congress when section 

404a was enacted. Postal Service Reply 

Comments at 22. 

The Commission is sympathetic to the 

arguments of the Public Representative 

and Stamps.com and Endicia, but the 

framework of section 404a is clear in its 

construction. The statute unequivocally 

states that the Postal Service is 

prohibited from certain behavior unless 

a condition is present. Put another way, 

if that condition is present, the Postal 

Service is not prohibited from that 

certain behavior. 

The Commission finds it appropriate 

to maintain the rule as constructed, as 

it better reflects the language and intent 

of the statute. The principles used under 

other laws to evaluate unfair 

competition are instructive and useful 

as reasoned analysis, but cannot be 

relied upon to change the plain meaning 

of the controlling law. Congress enacted 

section 404a(a)(1) using substantially 

different language than the Sherman 

Act.15 If Congress intended for the 

Commission to use the entire rule-ofreason analysis to evaluate 404a(a)(1) 

complaints, it likely would have used 

language similar to the Sherman Act 

language in formulating section 

404a(a)(1). 

3. Rule, Regulation or Standard 

Definition 

Proposed 3032.5(c) broadly defines 

rule, regulation, or standard to include 

other edicts by the Postal Service that 

may have the effect of a rule, but 

without a title identifying it as such. 

The Postal Service contends that the 

definition is too broad, ambiguous, and 

should rather refer to the Postal 

Service’s own definition of its rules in 

the Code of Federal Regulations. Postal 

Service Comments at 5–6. The Postal 

Service comments that the proposed 

definition could be argued to have no 

boundaries and would expand the 

Postal Service’s potential liability. Id. at 

6. 

Stamps.com and Endicia, Pitney 

Bowes, the Public Representative, 

United Parcel Service, and Newspaper 

Association of America counter that the 

broad definition is necessary to avoid 

the Postal Service’s ability to play 

semantics. Stamps.com and Endicia 

Comments at 3–4, Pitney Bowes 

Comments at 6, Public Representative 

Comments at 10, UPS Comments at 4, 

NAA Reply Comments at 7. 

The Commission does not find it 

appropriate to limit the jurisdiction of 

complaints brought under 404a(a)(1) to 

the Postal Service’s definition of its 

rules, regulations, or standards. As 

several commenters point out, the Postal 

Service is able to take action, as a 

regulator, without formally announcing 

its intent as a rule, regulation, or 

standard. Stamps.com and Endicia 

Comments at 3–4, UPS Comments at 4, 

NAA Reply Comments at 6–7. The 

Postal Service could also amend its 

definition through its rulemaking 

authority. 

The Commission finds that the 

uncertainty introduced by leaving the 

definition of rule, regulation, or 

standard open to action that has the 

effect of regulation without the title is 

not limitless as characterized by the 

Postal Service. Rather, it allows the 

Commission to review the facts and 

circumstances when a complainant 

believes the Postal Service has acted in 

its capacity as a regulator and violated 

the statute. 


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4. Passive Violations of 404a(a)(1) 

The Public Representative and 

Stamps.com and Endicia suggest that 

complainants be able to pursue a 

404a(a)(1) violation for a passive 

violation, where the Postal Service, by 

competing in a market, has established 

the terms of competition. Public 

Representative Comments at 10. 

Stamps.com and Endicia agree with the 

Public Representative and comment that 

the Postal Service entering a market that 

it also regulates could have the effect of 

precluding competition or establishing 

the terms of competition. Stamps.com 

and Endicia Reply Comments at 5. 

The Postal Service comments that 

allowing a complaint to proceed merely 

on the basis that the Postal Service has 

entered a market, and not more, would 

unlawfully expand the scope of section 

404a(a)(1). Postal Service Reply 

Comments at 26. The Postal Service 

notes that other laws and regulations 

govern its activity in other spheres. Id. 

The Commission notes that both 

section 404a(a)(1) and proposed rule 

3032.5 have no requirement as to the 

timing of the Postal Service’s rule versus 

its competing in a market. If the Postal 

Service enters a market, and existing 

rules coupled with that entry mean that 

the Postal Service has now precluded 

competition or established the terms of 

competition, the existing framework 

does not foreclose a complaint. If the 

Postal Service does not, however, have 

any rule, regulation or standard that 

applies, and enters a market, it is not 

possible for it to violate section 

404a(a)(1). The Postal Service is correct 

that merely competing, without an 

applicable rule, regulation, or standard, 

cannot form the basis of a 404a(a)(1) 

complaint. The plain reading of the 

terms of 404a(a)(1) requires the Postal 

Service to preclude competition or 

establish the terms of competition with 

its establishment of a rule or regulation. 

5. Per se Violations of 404a(a)(1) 

Grayhair Software and Pitney Bowes 

encourage the Commission to 

specifically identify, in its substantive 

rules, actions by the Postal Service that 

would, by their nature, be 

anticompetitive and in violation of rule 

3032.5. Grayhair Software Comments at 

17–18 (Grayhair advocates a new 

rulemaking to consider specific 

guidance on standards regarding 

competitive foreclosure.). Pitney Bowes 

Comments at 5. Pitney Bowes provides 

an example of a product or service with 

a non-zero cost being offered for free as 

what could be termed a per se violation 

of the rule. Id. Stamps.com and Endicia 

agree that the rules would be improved 

by offering guidance on Postal Service 

actions that would constitute per se 

violations. Stamps.com and Endicia 

Reply Comments at 2. 

The Postal Service opposes the 

Commission defining per se violations 

of the rule. Postal Service Reply 

Comments at 2. It notes the general 

move away from per se analysis in the 

antitrust law context, and that the 

availability of greater economic and 

market expertise has made for more 

nuanced analysis and adjudication. Id. 

at 2–4. The Public Representative also 

comments that per se declarations of 

prohibited conduct would be 

inappropriate. Public Representative 

Reply Comments at 11–12. The Public 

Representative notes the general 

disadvantages in offering declaratory 

judgments, where the facts of an 

individual case are not considered. Id. 

at 12. 

At this juncture, especially given that 

there have been no complaints 

adjudicated that have alleged a violation 

of 39 U.S.C. 404a, the Commission finds 

insufficient information exists in the 

record to determine what specific 

actions by the Postal Service would 

constitute a violation of section 

404a(a)(1). 

C. Rule 3032.6 Disclosure, Transfer, 

and Licensing of Intellectual Property 

Proposed rule 3032.6 implements 

section 404a(a)(2), which prohibits the 

Postal Service from compelling or 

attempting to compel the disclosure, 

transfer, or licensing of intellectual 

property from the complainant to a third 

party. No comments address proposed 

rule 3032.6, and there are no revisions 

to the proposed rule. 

D. Rule 3032.7 Unlawfully Obtaining 

Information 

Proposed rule 3032.7 implements 

section 404a(a)(3), which prohibits the 

Postal Service from obtaining 

information from a party and later offer 

a product or service based on that 

information, unless the Postal Service 

has consent of the party or obtained (or 

could have obtained) the information 

from another source. Two aspects of 

proposed rule 3032.7 were addressed in 

the comments. 

1. Provided or Sought To Provide to the 

Postal Service 

Stamps.com and Endicia comment 

that a party need only to provide or seek 

to provide a product, and that it need 

not be directed at the Postal Service. 

Stamps.com and Endicia Comments at 

5–6. Stamps.com and Endicia contend 

that a product could be offered to the 

public, and the Postal Service could 

obtain information from the 

complainant through other submissions, 

approvals, or concurrence. Id. at 6. 

Stamps.com and Endicia comment that 

this revision conforms more closely to 

the language of 404a(a)(3). Id. at 5. 

The Postal Service counters that the 

intent of the statute is to protect parties 

in negotiation with the Postal Service, 

and it need not be extended beyond that 

scope. Postal Service Reply Comments 

at 32–33. The Postal Service contends 

that section 404a(a)(3) aims to protect 

confidential information shared with 

the Postal Service pursuant to a 

business relationship, and therefore 

should not apply outside the context of 

that relationship. Id. at 32. 

The Commission finds that 

Stamps.com and Endicia’s suggested 

revision is in keeping with the language 

of the statute, and amends the final rule. 

It may be difficult to envision a 

circumstance where the Postal Service 

would procure such confidential 

information outside the scope of an 

offering by the complainant, but that 

difficulty does not place the 

circumstance out of the realm of 

possibility. The Postal Service remains 

protected from a broad expanse of the 

rule by other requirements of the rule. 

Rule 3032.7(a)(2) requires the Postal 

Service to have obtained the 

information from the complainant, and 

3032.7(b) and (c) give the Postal Service 

the ability to defend the acquisition by 

showing availability from other sources 

or provision by consent. 

2. Informed Consent 

The Postal Service objects to the 

Commission’s linking of the District of 

Columbia’s Rules for Professional 

Conduct to the rule 3032.7 definition of 

informed consent. Postal Service 

Comments at 20. The Postal Service 

comments that the professional conduct 

rule was designed to apply to the 

attorney-client relationship, which is 

inapplicable to transaction negotiations 

as envisioned under section 404a. Id. at 

20–21. Notwithstanding those specific 

objections, the Postal Service also 

opposes all the requirements concerning 

consent in proposed rule 3032.7 because 

the Postal Service believes the 

requirements are based on a faulty 

assumption—that there is inequality of 

bargaining power between the Postal 

Service and its business partners. Id. at 

21. The Postal Service contends that 

these requirements concerning consent 

would interfere with the Postal Service’s 

ability to conduct business. 

Stamps.com and Endicia reply that it 

is unclear what about the nature of 

informed consent would interfere with 

the Postal Service’s ability to do 


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16See, e.g., Tousley v. Board of Education, 40 

N.W. 509 (Minn. 1888). 

17See American Jurisprudence, section 104 

Conversion. Consent is a complete defense to a 

claim of conversion. See, e.g., Bank of New York v. 

Fremont General Corp., 523 F.3d 902, 914 (C.A.9 

(Cal.), 2008). There can be no action for conversion 

where the dispossessed party consented to the 

taking of the property. The Commission notes that 

using the term uncoerced is duplicative as consent 

by its nature is voluntary. 

business. Stamps.com and Endicia 

Reply Comments at 4. 

The Public Representative replies that 

if the Postal Service is to rely on consent 

to defeat an allegation that it unlawfully 

appropriated intellectual property, that 

consent should be informed and 

uncoerced. Public Representative Reply 

Comments at 10. However, the Public 

Representative also agrees with the 

Postal Service that it should not have to 

make an affirmative prior 

communication explaining the risks of 

providing consent because it would be 

tantamount to treating business partners 

as fiduciaries. Id. 

The Commission’s intent with 

requiring informed consent in its 

proposed rules was to require the Postal 

Service to demonstrate more than a 

party’s signature on a form presented as 

a requirement before the Postal Service 

will enter negotiations. See Order No. 

1789 at 16. A long-held tenet of tort law 

is that where a party consents a claim 

of conversion will not lie.16 Similarly, if 

a party consents to the Postal Service’s 

taking of its intellectual property, a 

claim the Postal Service violated section 

404a(a)(3) cannot be sustained. Because 

the harm to an individual in losing 

rights to intellectual property can be 

great, the Commission sought to protect 

that interest. 

However, the Commission agrees with 

the Postal Service and the Public 

Representative that the heightened duty 

articulated in rule 3032.7 is more than 

would be necessary to protect that 

interest. The Commission finds that the 

standard for consent, to justify the 

taking of intellectual property is not 

informed and uncoerced consent but 

rather the traditional common law 

notion of consent with a minor 

modification.17 To attempt to mitigate 

the potential harm to an individual 

losing his or her rights to intellectual 

property, the Commission will require 

consent to be written rather than 

implied for instances where the Postal 

Service claims consent as a defense 

pursuant to 3032.7. 

The Commission will examine 

evidence that the complainant 

consented in writing to the taking of its 

intellectual property under rule 3032.7 

in light of the traditional common law 

notion of consent, and make a 

determination based on the 

preponderance of the evidence whether 

complainant consented to the taking. 

The final rule will not include a 

requirement that the Postal Service has 

communicated adequate information 

and explanation about the risks of 

providing such consent. The 

Commission agrees with the Postal 

Service and the Public Representative 

that such a requirement, as used in 

evaluating legal representation 

agreements, is not appropriate to use in 

evaluating informed consent between 

the Postal Service and a contracting 

partner. By omitting this language, the 

Commission does not require the Postal 

Service to act in an advisory capacity to 

its contracting partners when it obtains 

consent. 

A requirement that a party provide 

written consent to the Postal Service’s 

taking of its intellectual property strikes 

an appropriate balance between the 

need to protect an individual’s property 

rights and avoid undue burden to the 

Postal Service. 

E. Rule 3032.8 Statutorily Authorized 

Affirmative Defense 

Proposed rule 3032.8 sets forth that 

the Postal Service may offer, as an 

affirmative defense to any alleged 

violation of section 404a, that it is 

specifically authorized by law to take 

such action (or inaction) that is alleged 

to be in violation of the section. 

Subsection (b) states that the Postal 

Service may not use its general or 

specific authority (enumerated in 39 

U.S.C. 401 and 404) to form the basis of 

an affirmative defense. 

The Postal Service comments that the 

rule is not tenable, because it precludes 

the Postal Service from using its 

authority to act. Postal Service 

Comments at 15. The Postal Service 

gives an example of using its eminent 

domain authority over intellectual 

property. Id. at 16. 

Pitney Bowes, as well as Stamps.com 

and Endicia, comment that section 404a 

would be meaningless if the Postal 

Service could justify its actions based 

on its general and specific authority 

alone. Pitney Bowes Comments at 5, 

Stamps.com and Endicia Reply 

Comments at 3–4. 

Authority for all Postal Service action 

is derived from its general or specific 

authority that is set forth in 39 U.S.C. 

401 and 404. The Commission does not 

read the proposed rule 3032.8 to 

foreclose the Postal Service’s ability to 

execute its general or specific authority 

as authorized by those sections. Action 

by the Postal Service pursuant to either 

of those sections is limited by and 

subject to 39 U.S.C. 404a, as both the 

Postal Service and other commenters 

point out. There appears to be a 

misunderstanding, however, in the 

construction of rule 3032.8. 

The Postal Service, under the current 

iteration of the rule, is not precluded 

from offering its statutory authority in 

sections 401 or 404 as a justification for 

any action it may take. It is only 

prohibited from offering, as the basis of 

an affirmative defense, its general or 

specific authority. The Postal Service 

uses the example of its specific 

authority to exercise eminent domain, 

and contends that it could use that 

authority over intellectual property. 

Rule 3032.8 does not preclude the 

Postal Service’s use of its eminent 

domain authority. The rule makes clear 

that such authority is subject to the 

limitations imposed by section 404a. 

Rule 3032.8(c) clarifies that the Postal 

Service is not precluded from arguing 

that its use of its eminent domain 

authority does not have the requisite 

effect to violate section 404a(a). 

The rule is only meant to convey that 

both sections 401 and 404 are subject to 

the limitations of 404a and therefore 

unavailable as the basis for an 

affirmative defense of an alleged 

violation of 404a. Based on that 

understanding and interpretation, the 

Commission does not find it necessary 

to amend rule 3032.8. 

F. General Substantive Comments 

Several comments are more general, 

and though related to the substantive 

rules, are not tied to a specific proposed 

rule. 

Frederick Foster comments that the 

Commission should not administer 404a 

complaints, but rather should 

investigate allegations and report such 

results to the United States District 

Court. Foster Comments at 1–4. Title 39, 

section 404a(c), however, unequivocally 

confers the rights of any party to bring 

a complaint to the Commission on the 

basis of an alleged Postal Service 

violation of section 404a. 

Pitney Bowes comments that the 

Commission should take a broad view of 

its authority in enforcing 

anticompetitive practices, beyond 404a, 

and gives the example of workshare 

discounts that pass through less than 

100 percent of costs avoided. Pitney 

Bowes Comments at 8. The Commission 

notes that the review of workshare 

discount pricing, as acknowledged by 

Pitney Bowes, appears to extend beyond 

the Commission’s section 404a 

responsibilities. However, the 

Commission does not make a 

determination as to the scope of section 

404a vis-a`-vis workshare discount 

pricing to avoid prejudicing any 


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particular complaint where such issues 

may arise. 

The Newspaper Association of 

America cautions that the Commission 

should not import any principles of 

antitrust law or unfair competition, but 

rather should use 404a as a check on a 

government entity’s monopoly power. 

The Commission’s aim in developing 

rules implementing 404a is to follow 

Congressional intent as enacted. The 

Commission’s reference to 

anticompetitive principles is meant as 

guidance for the Commission and 

parties as to relevant lines of inquiry, 

not as any replacement of the statutory 

intent of section 404a. 

III. Section-by-Section Analysis 

This section sets forth the title of each 

final rule adopted by this Order, and 

any changes, to the rule from the 

proposed rule. The discussion of the 

comments and basis for those changes 

appears in the preceding section. 

Rule 3032.1. This provision describes 

the type of proceedings that are covered 

by this part. 

Rule 30302.5. This provision 

describes the showing that a 

complainant must make in matters 

involving unfair competitive advantage 

and the type of affirmative defense the 

Postal Service may raise. It also 

addresses the scope of certain terms. 

Rule 3032.6. This provision describes 

the showing that the complainant must 

make with respect to matters involving 

intellectual property and addresses the 

scope of certain terms. 

Rule 3032.7. This provision describes 

the showing that the complainant must 

make with respect to unlawfully 

obtained information and the type of 

affirmative defense the Postal Service 

may raise. 

Rule 3032.8. This provision addresses 

affirmative defenses the Postal Service 

may raise that are based in law. 

IV. Ordering Paragraphs 

It is ordered: 

1. Part 3032 of chapter III, title 39, 

Code of Federal Regulations, is adopted 

as set forth below the signature of this 

Order, effective 30 days after 

publication in the Federal Register. 

2. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

List of Subjects in 39 CFR Part 3032 

Administrative practice and 

procedure, Postal Service, Trademarks. 

For the reasons discussed in the 

preamble, the Commission amends 

chapter III of title 39 of the Code of 

Federal Regulations as follows: 

■ 1. Add part 3032 to read as follows: 

PART 3032—SPECIAL RULES FOR 

COMPLAINTS ALLEGING VIOLATIONS 

OF 39 U.S.C. 404a 

Subpart A—General 

Sec. 

3032.1 Applicability. 

3032.2–3032.4 [Reserved] 

Subpart B—Requirements and Defenses 

3032.5 Postal Service rules that create an 

unfair competitive advantage. 

3032.6 Disclosure, transfer, and licensing of 

intellectual property. 

3032.7 Unlawfully obtaining information. 

3032.8 Statutorily authorized affirmative 

defense. 

Authority: 39 U.S.C. 404a; 3662. 

Subpart A—General 

§ 3032.1 Applicability. 

The rules in this part govern 

proceedings filed under 39 U.S.C. 3662 

alleging violations of 39 U.S.C. 404a that 

meet the requirements of §§ 3030.2 and 

3030.10 of this chapter. 

§§ 3032.2–3032.4 [Reserved] 

Subpart B—Requirements and 

Defenses 

§ 3032.5 Postal Service rules that create 

an unfair competitive advantage. 

(a) A complaint alleging a violation of 

30 U.S.C. 404(a)(a)(1) must show that a 

Postal Service rule, regulation, or 

standard has the effect of: 

(1) Precluding competition; or 

(2) Establishing the terms of 

competition. 

(b) As an affirmative defense to a 

complaint under 39 U.S.C. 404a(a)(1), 

the Postal Service may demonstrate that 

the rule, regulation, or standard at issue 

does not create an unfair competitive 

advantage for itself or any entity funded, 

in whole or in part, by the Postal 

Service. 

(c) As used in this section, the term 

rule, regulation, or standard includes, 

among other things, documents or 

policies issued by the Postal Service to 

exercise its regulatory authority or 

otherwise act as a governmental entity. 

§ 3032.6 Disclosure, transfer, and 

licensing of intellectual property. 

(a) A complaint alleging a violation of 

39 U.S.C. 404a(a)(2) must show that the 

Postal Service has compelled or 

attempted to compel the disclosure, 

transfer, or licensing of the intellectual 

property of the person filing the 

complaint to a third party. 

(b) As used in this section, the term 

intellectual property includes, among 

other things, patents, copyrights, 

trademarks, trade secrets, and 

proprietary information. 

(c) As used in this section, the term 

disclosure, transfer, or licensing of 

intellectual property includes, among 

other things, an action that has an 

adverse effect on the value of 

intellectual property. 

§ 3032.7 Unlawfully obtaining information. 

(a) A complaint alleging a violation of 

39 U.S.C. 404a(a)(3) must show that: 

(1) The person filing the complaint 

has provided or sought to provide a 

product; 

(2) The Postal Service obtained 

information about such product from 

the person filing the complaint; and 

(3) The Postal Service offers or offered 

a postal service that uses or is based, in 

whole or in part, on the information 

obtained from the person filing the 

complaint. 

(b) As an affirmative defense to a 

complaint under 39 U.S.C. 404a(a)(3), 

the Postal Service may demonstrate that 

substantially the same information was 

obtained (or was obtainable) from an 

independent source or is otherwise 

obtained (or obtainable) through lawful 

means. 

(c) As an affirmative defense to a 

complaint under 39 U.S.C. 404a(a)(3), 

the Postal Service may show that the 

information obtained was provided by 

written consent. 

§ 3032.8 Statutorily authorized affirmative 

defense. 

(a) As an affirmative defense to an 

allegation of a violation of 39 U.S.C. 

404a(a), the Postal Service may 

demonstrate that it is specifically 

authorized by law to take the action or 

inaction alleged to be a violation of that 

section. 

(b) Authority under 39 U.S.C. 401 or 

39 U.S.C. 404 may not form the basis of 

an affirmative defense under paragraph 

(a) of this section. 

(c) Paragraph (b) of this section does 

not preclude the Postal Service from 

arguing that a particular Postal Service 

regulation or other action (or inaction) 

does not have the requisite effect to 

violate 39 U.S.C. 404a(a). 

By the Commission. 

Ruth Ann Abrams, 

Acting Secretary. 

[FR Doc. 2014–24376 Filed 10–15–14; 8:45 am] 

BILLING CODE 7710–FW–P 


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