SOFT WARE
PIRACY
U.S. states begin
to treat matter as
unfair trade practice
JOHN
COTTER
tate governments south of the
border have begun to address
the problem of software piracy from a different perspective—namely, that of unfair competition. Although this is directed
primarily at manufacturers in countries such as China, it potentially
impacts Canadian businesses as well.
When considering the harm
resulting from software piracy, the
focus traditionally has been on the
owner of the intellectual property, the
end user, and the loss of tax revenue
and jobs as a result of lower sales of
licensed software.
These recent initiatives focus on a
victim of software piracy that, until
recently, has not garnered much attention—
businesses that use licensed information technology (including software) and who are put at
a competitive disadvantage because they have a
higher cost structure than competitors using
unlicensed information technology.
While there are a variety of reasons why
manufacturers in different parts of the world
have lower costs, including cheap labour and
lax environmental regulation, the use of
unlicensed software is the one that these new
initiatives target. This issue is being tackled in
two ways. A significant number of states have
committed to using the existing laws to deal
with the situation and are urging federal authorities to do the same. In addition, two states have
passed specific legislation.
Last November, the attorneys general of 36
states and three U.S. territories wrote a letter to
federal trade commissioners and the director of
S
the Bureau of Competition urging them to consider how the Federal Trade Commission Act
“can be brought to bear on this problem at the
federal level.” In addition, they committed to
exploring the use of existing state laws to
address the problem.
In setting out the scope of the problem, their
letter notes that more than two million manu-
facturing jobs in the United States were
replaced by operations in China, India, Mexico
and Russia from 2001 to 2008 and that “theft
of intellectual property is endemic in the coun-
tries to which our manufacturing jobs have
been transferred.”
They go on to state: “While we recognize
that our manufacturers must compete in the
global economy, our companies should not be
forced to compete on an unfair playing field.
That is why each of us is seeking ways to use
the traditional power of our offices to address
the unfair advantage that results when for-
eign and other manufacturers use stolen
information technology, including pirated
software, to illegally slash their costs. Such
unfair competition hurts law-abiding busi-
nesses in our states, costing jobs and slowing
economic recovery.”
