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California Unfair Competition Law


California Unfair Competition Law

The California Unfair Competition Law has been in the media as the Attorney General of California, Kamala D. Harris, filed two lawsuits in January 2013 against international apparel manufacturers for gaining an unfair competitive advantage over American companies. The lawsuits say that the unfair advantage was gained as the companies used pirated software in the production of clothing imported and sold in California. The lawsuit against the international apparel manufacturers named two companies, one in India and one in China that the Attorney General alleges did not pay licensing fees for software, including products manufactured by Adobe, Microsoft and Symantec. The lawsuit says that because the profit margins are very small on the manufacture and sale of apparel, any advantage that the companies gained because of illegal acts, in this case the use of unlicensed software with an estimated cost of over $10 million would run foul of the Unfair Competition Law in California.

The two companies named in the Attorney General's lawsuit are Pratibha Syntex of India, and the Ningbo Beyond Home Textile Company based in China. The lawsuit says that since 2010 the Ningbo Company has exported 713,000 pounds of apparel products into California. Because of the alleged illegal acts by Ningbo and Pratibha Syntex, the apparel companies in California are unable to compete fairly. 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.

The lawsuit against Ningbo refers to the companies alleged piracy of software which has also been a target for Microsoft. In February 2012 Microsoft filed lawsuits against Ningbo alleging that they installed pirated copies of Microsoft software on company computers. After information from Ningbo, Microsoft estimated that the company was using over $321,000 of pirated Microsoft products. The company is alleged to be using pirated software from many other companies such as Adobe, Symantec, Corel, and others. The cost of licenses for the pirated software is estimated to run into millions of dollars.

History of the California Unfair Competition Law

The first California Unfair Competition Law was enacted in 1933 and was based on the Federal Trade Commission laws which prohibited unfair trade practices. In 1992, the California legislature amended the law to expand the definition of unfair competition to include "any unlawful, unfair, or fraudulent business act or practice". The Unfair Competition Law also includes a false advertising provision, which prohibits the distribution of "false, misleading or deceptive advertising". Many cases have been tied to the Unfair Competition Law, such as marketing practices, insurance practices, employment practices, health care, alleged criminal conduct, environmental protection, consumer transactions, and debt collection practices.

Unfair Competition Laws in Other States

The California Unfair Competition Law is wide ranging and most other states do not have such as reaching laws. Texas has the Deceptive Trade Practices and Consumer Protection Act that prohibits "false, misleading, or deceptive acts or practices in the conduct of any trade or business". Under this state law, a consumer who has suffered economic damages or mental anguish as a result of a false, misleading, or deceptive business practice may recover damages. The state of Illinois has the Consumer Fraud and Deceptive Business Practices Act and a Uniform Deceptive Trade Practices Act, where claims for unfair trade practices can be filed under both statutes. Alabama has an unfair competition statute that prohibits "deceptive acts or products in the conduct of any trade or commerce". In 2011 the state of Washington passed an IT Unfair Competition Law that prevents unfair competition by manufacturers who use stolen or misappropriated software or any other forms of information technology. Persons who sell or offer for sale any product manufactured using Illegal IT can be sued for damages up to a maximum of $250,000.

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