Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES NEWS: California AG Sues International Apparel Manufacturers Over Use of Unlicensed Software, (Jan 25, 2013)

By Tobias J. Gillett, J.D., LLM.

California Attorney General Kamala D. Harris has filed lawsuits against Pratibha Syntex Ltd., an Indian apparel manufacturer, and Ningbo Beyond Home Textile Co. Ltd., a Chinese apparel manufacturer, asserting that the companies had violated California’s Unfair Competition Law (UCL) by using pirated software in the manufacture of their clothing, thus allegedly gaining a competitive advantage over domestic manufacturers, the Office of the Attorney General has announced.

According to the complaints, Microsoft, Inc. discovered during lawsuits against Pratibha and Syntex that the companies had employed its software without acquiring the appropriate licenses. The present lawsuit asserts that the companies—through the unlicensed use of software produced by companies such as Microsoft, Adobe Systems Inc., and Symantec Corporation—acquire a competitive advantage in the “low-margin” apparel industry over California apparel manufacturers that do purchase software licenses.

The complaint alleges that the companies can employ funds that would otherwise be spent on licenses to hire more employees, invest in new facilities, or engage in research and development. The unlicensed use of the software also purportedly discourages American software companies that develop software used in the garment industry from investing in new technology and products.

“Companies across the globe should be on notice that they will be held accountable in California for stealing our intellectual property,” Attorney General Harris said. “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.”

According to the complaints, Pratibha has imported over 19,000 pounds of clothing into California since 2010, while Ningbo has imported approximately 713,000 pounds. California apparel manufacturers allegedly employed more than 58,000 people in 2012, and generated more than $5 billion in annual revenues since 1990.

News: StateUnfairTradePractices ConsumerProtection CaliforniaNews