New US law to hit manufacturers where it hurts the most | Bangkok Post: tech

BY INVITATION

Law enforcers from 39 US states and territories have teamed up against the use of illegal IT by exporters. The result could be more challenges to illegal made-in-Thailand IT products exported to the United States under US unfair competition laws this year.

The US state governments have recognised that the use of illegal IT may give an unfair advantage to companies, adversely affecting competition. They are beginning to put the law to work to address this anti-competitive behaviour of exporters to the US including those from Thailand.

Just a few months ago, Washington and Louisiana states enacted unfair-competition laws to level the playing field among exporters to the US by eliminating unfair cost advantages arising from the use of unlicensed software and hardware.

Other states are also considering similar laws to prohibit the use of illegal IT by exporters to the US.

In the latest development, 39 attorneys general representing 36 states and three territories signed a letter to the Federal Trade Commission (FTC), urging the regulator to take punitive legal action against firms using illegal IT, raising the issue to the federal level.

In the view of these states' top law enforcers, many states already have the laws they need to produce the same impact as Washington's new law, and they urge federal competition-law enforcers to recognise that they have the same authority and to act on that authority.

This letter reveals the growing frustration of US businesses and law enforcement that intellectual property theft hurts not only intellectual property owners, but also seriously harms other industries, and ultimately, entire economies far beyond the US borders.

Piracy puts exporters who play by the rules of intellectual property rights at economic disadvantage since they pay for licensed IT when their unfair competitors don't.

Since IT costs figure into overhead, US firms that buy from these exporters cannot compete on price with other US retailers who source from overseas manufacturers that use illegal IT.

The strategic consulting firm Keystone Strategy recently found that piracy results in more than US$2.9 billion per year as a competitive disadvantage for manufacturers in Latin America, central and eastern Europe and Asia Pacific.

Piracy also hinders the growth of an emerging economy's own IT and software industries because it undermines protection of local IT innovations and creation of the country's software entrepreneurs.

Considering the likelihood that punitive legal actions against the use of illegal IT will receive greater attention from US federal law enforcement, manufacturers and exporters to the US are well advised to take proactive measures by replacing unlicensed IT with legal products and establishing a permanent corporate policy prohibiting the use of illegal IT at workplace.

On the flip side, the enactment of Washington state's Unfair Competition Act and similar laws will help strengthen the enforcement of Thailand's copyright law while offering new-found opportunities for Thai manufacturers and exporters who play by the rules.

Given the inclusion of third-party liability in the law, US buyers will no doubt clean up their overseas supplier lists and seek to trade only with exporters who use legal IT. All this will benefit not only IP owners but also exporters and the Thai economy.

For government policymakers, the law will help create a market environment that encourages the use of legal IT _ and a market differentiator that multinational companies will be looking for in the near future when they source new manufacturing.

Stacy Baird is a former policy adviser to members of the US Senate and House of Representatives. He is based in Hong Kong.