Attorney General Kamala D. Harris Files Unfair Competition Lawsuits over Use of Pirated Software in Apparel Industry

LOS ANGELES -- Attorney General Kamala D. Harris today filed lawsuits against two international apparel manufacturers for gaining an unfair competitive advantage over American companies by using pirated software in the production of clothing imported and sold in California.

The companies, based in China and India, did not pay licensing fees for software, including products manufactured by Adobe, Microsoft, Symantec and others. The complaints allege that the foreign apparel manufacturers who have not paid software licensing fees have a significant cost advantage in the low-margin business of apparel manufacturing, shipment and sales.

“Companies across the globe should be on notice that they will be held accountable in California for stealing our intellectual property,” Attorney General Harris said. “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.”

The lawsuits, filed in Los Angeles County Superior Court, charge Pratibha Syntex Ltd. of India and Ningbo Beyond Home Textile Co. Ltd., and its sister companies, of China with violating California’s Unfair Competition Law. Since 2010, the Ningbo Companies shipped approximately 713,000 pounds of apparel products into California. 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.

The complaints also allege that these companies obtain an unfair advantage because they can redirect money saved by using pirated software to hire employees and to expand their facilities and their research and development efforts. Furthermore, American companies that are developing software, particularly software that is used in the garment industry, are discouraged from investing in new technology and products if they know their software will be used illegally.

California’s apparel manufacturers, which are largely based in Los Angeles County, employed more than 58,000 people last year and generated more than $5 billion in annual revenues since 1990. In 2010, the industry employed 40,872 workers in Los Angeles County, which accounts for nearly 70 percent of the industry’s workforce in the state.

A study by the Orange County Business Council found that California has lost nearly 400,000 manufacturing and technology jobs over the past decade to countries where piracy rates are as high as 80 percent. This activity has resulted in a loss of $1.6 billion in economic activity and $700 million in tax revenue for California.

The complaints are attached to the online version of this release at http://oag.ca.gov/news.