DigiStamp complains about Electronic Postmark

A formal complaint filed this week with the Postal Rate Commission says the U.S. Postal Service is using its Electronic Postmark program to compete unfairly against small businesses that offer a similar Internet service for verifying the authenticity of digital documents.

In the complaint, DigiStamp Inc., of Colleyville, Tex., is claiming that the USPS violated its charter by not seeking prior approval from the Postal Rate Commission before offering the Electronic Postmark service.

The commission, which has jurisdiction over postal services, must decide whether the Electronic Postmark service is a postal service, said Steve Sharfman, the commission's general counsel. If it is, he said, the commission will issue an opinion. USPS officials have 30 days to answer the complaint before the commission begins its review.

"The Postal Service is allowed to compete as long as it does so fairly, and the commission's role is to make sure that it does so fairly," Sharfman said.

DigiStamp officials maintain that USPS, as a quasi-public institution, has an unfair competitive advantage by virtue of having government resources behind it.

The Electronic Postmark program uses a service developed for USPS by AuthentiDate Inc., a New York company. Both USPS and DigiStamp created their service offerings around an open standard of the Internet Engineering Task Force. Both use auditable time stamps, digital signatures and hash codes to certify that a digital document is authentic and has not been tampered with or altered.

USPS also has an agreement with Microsoft Corp., which includes a plug-in for the Electronic Postmark in the company Word 2003 word processing program for the Windows XP operating system.

DigiStamp officials said their complaint in no way involves Microsoft. "The actions of the Postal Service make up the body of the complaint," said Rick Borgers, a co-founder and lead technologist for DigiStamp, a privately held company. "Had Microsoft not been involved, the complaint would still have been valid."

Founded five years ago, DigiStamp officials have seen its business pick up in the past few years since medical research companies started using the company's Internet service to certify that test samples are unaltered and accurately reflect the results obtained on a particular date.

The only similar complaint that Sharfman could recall was filed a few years ago by the United Parcel Service, which claimed that USPS was offering a new class of service — transmitting large blocks of electronic data — without approval by the Postal Rate Commission. Before the commission had completed its review, USPS dropped the service because it was losing money.

Borgers said his company does not plan to file a lawsuit against USPS if it is unsuccessful in stopping the Electronic Postmark program.

In a separate development this week, a unanimous Supreme Court ruling gave the USPS protection from being sued by companies for damages under federal antitrust laws.