The newly enacted Unfair Competition Act in two of the
states in USA promises to have profound effects on international trade and
business practices. With nearly 39 more states showing active interest towards
its enactment and implementation, the clash against pirated software is
sizzling up with each passing day.
As per the newly enacted law, the manufacturers and
retailers that sell products in the two states of Washington and Louisiana
could face stiff penalties if their products are made using stolen or misappropriated
IT. But the more difficult aspect of this law to subscribe to is that the law
also creates provision wherein damages worth thousands of dollars could be
claimed against third parties who contract with violating manufacturers and
sell their products in the aforementioned states.
First of all, it must be understood that the law is
applicable for tangible articles or products only. All forms of services
including restaurant services, products subject to regulation by USFDA etc are
excluded from the definition. Therefore, it is the manufacturers who are the
primary targets of the law.
Moreover, as defined by the Act, “business operations” include
manufacture, distribution, marketing or sales of a product or article.
Therefore, even if pirated software is being used by any of the vendors or
suppliers or in any of the back offices for activities such as accounting,
stock keeping, inventory management etc. the product will be considered as a
liability under the act if it is sold in any of the two aforementioned states.
This results in a massive burden on the manufacturers to
keep their entire supply chain clean of any piracy when it comes to IT. If the
use of misappropriated software is detected in any of the links of the value
chain of a product which finds its way into the markets of US, it could cause
serious damage to the business of the company and its prospects of selling
again in the US.
At the same time, for sellers who act as just
intermediaries between manufacturers and customers; they will also have to
police their entire supply chain to avoid an imposition of any kind of remedy.
Various measures will have to be taken proactively in order to prevent such an
eventuality.
The sellers could maintain an updated code of conduct in
accordance with the provisions of the UCA and ensure that the entire supply
chain adheres to the same. They could also provide incentives to the suppliers
so as to prevent them from using stolen or pirated IT. They could go for
measures such as including remedial measures in their internal contract with
the supplier holding him responsible for any inappropriate behavior related to
software. Another proactive measure which could be of use is keeping a watch
for any lawsuit which is filed under any of the federal or state courts against
any manufacturer/supplier of that industry under the UCA. This would prevent
other companies who had done or planned to do business with them to stay safe.
Such measures are expected to go a long way towards
keeping the entire supply chain for the product safe. Not only the
manufacturers and sellers but third party vendors and suppliers are also on the
same page, thus ensuring healthy growth in business for years to come devoid of
any legal hassles.
References:
Shickich,
Daniel, 2012, Finding Safe Harbor: Navigating Washington’s New Unfair Competition
Law, Washington Journal of Law, Technology & Arts, Volume 8, Issue 1.
