An earlier dispute between project44 and MyCarrier has been extended to bring in SMC3, as the provider of freight visibility now accuses SMC3 of theft of intellectual property.
The lawsuit by project44 (p44) was filed Tuesday in the U.S. District Court for the Northern District of Georgia.
Project44’s lawsuits against MyCarrier and SMC3 may be separate pieces of litigation, but they are effectively linked in describing the sequence of events that led to their filings.
According to the lawsuit, MyCarrier had a five-year agreement with p44 that enabled MyCarrier to offer p44’s functionality through the MyCarrier transportation management system. It was signed in 2023.
The deal would allow MyCarrier “to offer the [p44’s] features to its customers, who are typically small to medium shippers of goods without their own TMS platforms of logistics departments.”
The deal also held confidentiality provisions, prohibiting MyCarrier from using what it gleaned through the p44 contract to build its own functionality, particularly in regard to a robust API service provided by the p44 software.
Case in Delaware goes on
“p44 eventually learned that MyCarrier was breaching the terms of the Agreement by, among other things, developing software that copied some of the features of p44’s Software in violation of the No Build Behind Restrictions,” the latter provision being part of the contract between the two companies. The suit notes that the dispute that ensued ended up in Delaware Chancery Court, where the case continues. (There is a Jan. 23 hearing in Delaware regarding pt44’s request for an injunction against MyCarrier, according to a p44 spokeswoman.)
That review of the initial dispute between p44 and MyCarrier is at the heart of the Delaware action. Where the latest suit between p44 and SMC3 diverges is that it focuses on what happened between MyCarrier and SMC3, which p44 believes is a further violation of the confidentiality provisions of the initial p44/MyCarrier agreement.
With the relationship between p44 and MyCarrier negatively impacted by the dispute in the Delaware court, MyCarrier turned to SMC3 (whose full name, Southern Motor Carriers Association Inc., is used in identifying the actual defendant) to provide many of the same functions that the TMS had been getting from p44.
But according to the lawsuit, SMC3 was unable to match what p44 provided. “SMC3 encountered difficulty in enhancing its technology to meet those needs and reached out to MyCarrier for assistance,” the lawsuit says. “MyCarrier subsequently disclosed to SMC3 the trade secrets it learned from p44, including how p44’s Software talks to different systems and collates data across them. SMC3 then used those trade secrets to enhance its own software and keep MyCarrier’s business.”
p44 says in the lawsuit that it had sent a cease-and-desist letter to SMC3 when it became aware of SMC3’s alleged activities.
Individual is a defendant in the case
Additionally, there is a second defendant in the lawsuit: Tim Story, who is a board member at both MyCarrier and SMC3. According to the lawsuit, Story “had reviewed and approved the provisions in his role at MyCarrier’s board,” so he should have known about the confidentiality restrictions in the p44/MyCarrier contract.
“Nevertheless, SMC3 knowingly disregarded the restrictions (in the p44/MyCarrier agreement) in reaching out to MyCarrier and in acquiring and using p44’s trade secrets for its own benefit,” the lawsuit says. “In doing so, it solicited MyCarrier to disclose p44’s trade secrets in breach of the Agreement’s confidentiality restrictions.”
The p44 lawsuit turns to some specifics. “One functionality of p44’s Software is the ability to digitize, exchange, and store electronic bills of lading (‘eBOL’),” the suit says. “As such, eBOL functionality was subject to the No Build Behind Restrictions” in the original p44/MyCarrier agreement.
The suit says p44 learned around June 2024 that MyCarrier was “working to develop eBOL functionality in violation of those restrictions, and potentially doing so in collaboration with SMC3.”
That led to another cease-and-desist letter, this time sent to SMC3. According to the lawsuit, the response from SMC3 was “carefully worded.” It said SMC3 was “not a party or beneficiary to any agreement between MyCarrier and project44” and was “not aware of any involvement of SMC3 with respect to any alleged MyCarrier eBOL service.”
The initial agreement between p44 and MyCarrier has been “breached and essentially abandoned by MyCarrier,” according to the lawsuit. There are numerous sections of redacted portions in the lawsuit dealing with some of the specifics in the agreement.
The lawsuit lists two counts of misappropriation of trade secrets and two counts of tortious interference with business relations. The suit asks for permanent and temporary injunctive relief against SMC3 prior to a jury trial.
A request to SMC3 for comment had not been responded to by publication time. The request to the spokeswoman for SMC3 also included a request to Story, an SMC3 board member.
More articles by John Kingston
Trac Intermodal’s outlook at Moody’s now negative, but debt rating affirmed
Benesch 2024: Pent-up dollars could be big factor in logistics M&A next year
Oil in 2025 increasingly looking like a buyer’s market
The post Project44’s latest lawsuit in intellectual property dispute targets SMC3 appeared first on FreightWaves.
