Friday, January 25, 2013
A.G. Sues Asian Textile Companies for Unfair Competition
Harris Claims Use of Pirated Software Hurts Local Manufacturers
By a MetNews Staff Writer
Attorney General Kamala D. Harris yesterday sued two Asian-based apparel manufacturers under the Unfair Competition Law, claiming they gained an unfair advantage over American companies by using pirated software in the production of clothing imported to this country and sold in California.
The complaints, filed in Los Angeles Superior Court, allege that Pratibha Syntex Ltd. of India and Ningbo Beyond Home Textile Co. Ltd. of China did not pay licensing fees for software. The complaints allege that the foreign apparel manufacturers who have not paid software licensing fees have a significant cost advantage in the low-margin business of apparel manufacturing, shipment and sales.
“Companies across the globe should be on notice that they will be held accountable in California for stealing our intellectual property,” the attorney general said in a statement. “This is an anticompetitive practice which harms our state’s economy and is illegal. These lawsuits go after overseas companies whose unlawful actions are eroding California’s garment industry and placing California companies who legally pay for computer software at a disadvantage.”
The attorney general said that in the past three years, Ningbo and its affiliated companies have shipped approximately 713,000 pounds of apparel products into California, and that Pratibha has shipped more than 19,000 pounds into the state. Ningbo makes men’s clothing and caps, while Pratibha Syntex exports women’s cotton tops and other clothes for men, women, and children.
The complaints also allege that these companies obtain an unfair advantage because they can redirect money saved by using pirated software to hire employees and to expand their facilities and their research and development efforts. Furthermore, American companies that are developing software, particularly software that is used in the garment industry, are discouraged from investing in new technology and products if they know their software will be used illegally, the attorney general said.
Harris noted in the complaints that Microsoft has sued both Ningbo and Pratibha Syntex in their home countries for using pirated versions of the company’s software, and said there is evidence that pirated versions of software made by Adobe, Corel, and other companies are being used as well.
Harris said in the complaints that the suits were filed in Los Angeles County because the anticompetitive effects of the alleged piracy were primarily felt here. She noted that the state’s apparel makes employ more than 580,000 people—70 percent of them in this country—and generate billions of dollars in annual revenue. In her press release, she cited an Orange County Business Council study that found that California has lost nearly 400,000 manufacturing and technology jobs over the past decade to countries with high rates of piracy.
“This activity has resulted in a loss of $1.6 billion in economic activity and $700 million in tax revenue for California,” the attorney general said.
The attorney general asked that the court declare the companies to be in violation of the UCL, bar them from doing business in the state until they certify that they are no longer using pirated software, appoint a trustee with access to their computer systems and authority to monitor their software usage, require them to periodically provide evidence under oath that their computer programs are properly licensed, and impose civil penalties.
The cases are People v. Syntex Ltd., BC499751, and People v. Ningbo Beyond Home Textile Co. Ltd., BC499771.
Copyright 2013, Metropolitan News Company