Lawsuit Alleges Sprint Used Trade Secrets To Sink RadioShack

Radioshack AH 1
Advertisement
Advertisement

Sprint is facing down a lawsuit from a committee of RadioShack creditors who say that the carrier obtained trade secrets from RadioShack and used them to open competing stores that contributed to the technology chain's demise. According to these creditors, Sprint's actions were one of the leading causes of RadioShack having to close up shop. The lawsuit thus places the loss of some 6,000 RadioShack jobs squarely on Sprint's shoulders. The suit is not specific about exactly what trade secrets were stolen or how they were used in the creation and maintenance of competing stores, but does allege that Sprint opened up carrier stores near some of the biggest cross-branded RadioShack and Sprint joint locations, driving business away from those locations and stifling RadioShack's chances at recovery from its prior decline. The creditors are seeking damages in the amount of $500 million for breach of contract.

The lawsuit doesn't just tackle Sprint allegedly using RadioShack's own trade secrets against it, but also says that Sprint failed to fulfill its contractual obligations to put its own inventory and people into RadioShack's stores. This is allegedly due to the hefty financial burden Sprint was under at the time of the partnership, a problem that still plagues the company today, though far less urgently. Another possible motivation, of course, would tie into Sprint's alleged plan to sink RadioShack. While a plot to sink a partner may seem nonsensical, doing so would potentially give Sprint the opportunity to take full control of a large number of retail locations, vastly increasing the company's retail presence. David Tovar, a spokesperson for Sprint, said that the lawsuit leaves the company "disappointed," and that Sprint is maintaining innocence in the matter and will defend itself in court.

Sprint originally inked its deal with RadioShack back in 2015. The deal would see around 1,400 RadioShack locations co-branding as Sprint stores, and devoting significant floor and inventory space to the carrier, while ceasing to offer unlocked phones, as well as phones and plans from carriers besides Sprint. The arrangement didn't end up doing RadioShack much good, and the company soon faced bankruptcy. Currently, RadioShack is closing almost all physical locations and liquidating vast amounts of inventory online. Some of the formerly co-branded locations are now Sprint stores, or are slated to become Sprint stores. Only about 70 company-owned RadioShack stores are left operating, though there are a number of dealer and franchise stores.

Advertisement