Fresh threat for Lankan exports over new US unfair competition laws

The US is one of the largest export markets for Sri Lankan apparel exporters, with goods exported in 2011 and 2012 totalling approximately $ 2,950 million.

The United States is the main importer of textile goods from Sri Lanka, accounting for 40% of apparel exports from Sri Lanka. In addition several other industries are engaged in the manufacturing of different products for the US market, such as rubber, precious stones, tea and cinnamon to name a few. Total value of all goods exported to the US in 2011 and 2012 is $ 4,342 million. Manufacturers in Sri Lanka exporting to the US ought to be aware of some recent legal developments.

Unfair competition laws in the United States prohibit the use of illegal and unlicensed software and hardware in international trade to prevent unfair competitive market conditions and uneven playing field between competitors.

The unfair competition movement gained strong momentum in the United States in November 2011, when attorneys general from 36 US states and three US territories announced their commitment to use existing State powers to step up enforcement against manufacturers that use “stolen IT”.  They also called on the Federal Trade Commission to use its powers to help tackle the issue.

Just a few weeks ago, citing the unfair competition laws of the state, California Attorney General Kamala Harris filed two law suits in the State Court alleging that two international apparel makers were using pirated software in their textile and apparel manufacturing business while exporting to the State of California, USA, and thus having an unfair competitive advantage over the US firms which were using genuine and legal software.

Attorney General Harris alleged that the China-based company Ningbo Beyond Home Textile Co. Ltd. and an India-based company, Pratibha Syntex Ltd., were found using illegal copies of software belonging to software publishers such as Adobe Systems Inc., Microsoft Corp., and Symantec Corp. in violation of California’s unfair competition law.

Commenting on the cases, Harris said: “Companies across the globe should be on notice that they will be held accountable in California for stealing our intellectual property. 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 information released by the office of the California Attorney General, since 2010, Ningbo companies have shipped approximately 713,000 pounds of apparel products into California and Pratibha has shipped more than 19,000 pounds into the state. Ningbo Beyond Group exports men’s suits, blazers, coats and jackets, as well as fleece cargo pants, fleece jackets and caps to California. Pratibha Syntex exports women’s cotton tops and other clothes for men, women, and children.

In October 2012, Massachusetts Attorney General Martha Coakley fined a Thailand-based seafood company, Narong Seafood Company Ltd., as a part of an unfair competition settlement resolving the allegations that Narong’s use of unlicensed software provided an unfair competitive advantage over Massachusetts businesses.

Attorney General Coakley alleged that Narong unfairly sold and delivered products into the State by illegally using unlicensed Microsoft Office software without paying the appropriate licensing fees.