Alliance warns against software piracy

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The Open Computing Alliance (OCA), an international agency for intellectual property and trade, reminded the export industry and supply chain in Cebu City and in the Philippines in general to adhere to legal software licensing and usage, to avoid being subjected to possible charges of unfair competition as covered by the laws of the United States.

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In a seminar conducted recently by the organization and endorsed by the American Chamber of Commerce for Cebu-based exporters, Michael Mudd, OCA secretary-general for Asia Pacific, cited new developments in US unfair competition laws requiring US trading partners to use only legitimate information technology (IT), including software, in carrying out their manufacturing and commercial activities.

Mudd cited as an example the passage by the Washington state legislature of a bill in 2011 making it a violation of the state’s unfair competition laws for a business to sell products in Washington “while using stolen or misappropriated information technology in its business operations.”

He pointed out that, “although this is not a US Federal law, the principle is enshrined in the US Federal Trade Commission in preventing unfair competitive advantage and providing a level playing field.”

Mudd warned that being subjected to charges of unfair competition could reduce the opportunities for Philippine exporters in supplying the United States, which has been a big market for Philippine-made products.

According to him, exports of manufactured and processed goods to the US, including garments, food and seafood products, totaled $9.1 billion in 2011, an increase of $1.2 billion, or 14.6 percent from 2010. He also noted that since 2006, the trade balance has been in favor of the Philippines.

Mudd mentioned that two apparel manufacturers—China-based Ningbo Beyond Home Textile Co. Ltd and India-based Pratibha Syntex Ltd—are facing lawsuits and fines that could amount to hundreds of thousands of dollars for software copyright violations.

California Attorney General Kamala Harris took this step to address the harm caused to local California businesses by the imported products manufactured using unlicensed software.

Mudd enumerated the measures exporter companies will have to undertake to ensure they uphold the laws, if convicted, which include: software legalization; proving compliance; six-month audits for five years; appointing a trustee for five years to verify compliance with court orders; payment of costs; and fines, which may be punitive and prohibitive in order to deter others.

According to independent surveys, the use of illegal software cost copyright owners more than $63 billion in 2011. In commercial software, the value of illegal software used in Asia was highest worldwide. The world’s largest manufacturing center, China, has a piracy rate of 77 percent.

In other regional manufacturing centers, the software piracy rates are 72 percent in Thailand, 86 percent in Indonesia and 81 percent in Vietnam. The Philippine software piracy rate was at 70 percent, which amounted to $338 million, or approximately P14.6 billion in commercial value.

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