“Louisiana is blazing the trail against corporate software piracy with the nation’s toughest law,” says Attorney General James D. “Buddy” Caldwell. “We are successfully leveling the playing field for Louisiana businesses and those across the country in a breakthrough case against a Chinese manufacturer. The company was using pirated American software to gain competitive advantage over Louisiana manufacturers.”
Chinese company Guangdong Canbo Electrical Appliance Co. Ltd. (“Canbo”), the manufacturer of popular Char-broil® and Char-grill® barbeque grills, is settling after receiving Attorney General Caldwell’s letter threatening a lawsuit under Louisiana’s Unfair Trade Practices law. Canbo ran company functions for years using stolen business software and when they were caught, adamantly insisted they would only “partially legalize.” Last December, Attorney General Caldwell sent the company a letter threatening to file suit based on Louisiana’s 2010 Unfair Trade Practices law with software piracy specifically included. “It is among the first and most powerful of its kind in the United States to address software piracy as a form of unfair trade practices,” says Caldwell. “We told Canbo we could ban their products from Louisiana and they quickly came to the table and agreed to pay to fully legalize their software 100%.” Canbo paid over a quarter million dollars for the software and also agreed to an audit next year to insure they remained compliant.
“By including pirated software in our Unfair Trade Practices statutes,” explains Assistant Attorney General Stacie DeBlieux, “we put teeth in the law to prosecute businesses who use stolen software to gain competitive edge over ethical businesses.” Deblieux represented Attorney General Caldwell on a Washington, D.C., panel interested in Louisiana’s pioneering law while First Assistant Attorney General Trey Phillips worked directly with Microsoft officials in Seattle.
Attorney General Caldwell and staff worked with Microsoft to gather evidence in the case. Microsoft attorney Mary Jo Schrade says, “We have a commitment to help protect our customers from a host of problems that arise with the spread of pirated software. It has been incredible seeing Attorney General Caldwell use Louisiana’s cutting-edge law to get speedy results that will have an immediate beneficial impact for the state and the country.”
Rob McKenna, former Washington state Attorney General and President of the National Alliance for Jobs and Innovation helped on the Louisiana case. “Our nearly 400 members appreciate and thank Attorney General Caldwell,” says McKenna, “for helping protect U.S. manufacturing jobs by going after overseas software piracy. He recognizes that modern manufacturing depends heavily on software, and that competitors who steal it give themselves an unfair advantage over companies in Louisiana and elsewhere.”
Collating figures to prove the loss, Harvard Business School professor Dr. William Kerr and National Association of Manufacturers chief economist Dr. Chad Moutray just released findings on the economic impact of piracy on U.S. manufacturers. The Kerr-Moutray study concluded American manufacturers lost $239.9 billion in revenue from 2002 to 2012 to global companies using pirated American software. The competitive advantage gained by violators, says the study, decreased U.S. GDP by nearly $70 billion and, worse, forced the loss of 42,000 jobs.
In Louisiana, the study revealed a loss to companies of $11.8 billion in the same ten year period. “But we could regain $1.4 billion in the next four years by continuing to crack down on piracy,” adds Louisiana Assistant AG DeBlieux. “We can’t level the playing field on labor rates, cost of materials and manufacturing overhead but we can certainly level the field on software. When we identify a violator, our law gives us the power to ultimately shut down the shipments of their products into our state. These companies cannot exist without the ability to sell to American consumers, so when they realize that the state can put a stop to that, things change pretty quickly.”
In Lafayette, Louisiana, Keith and Gregg Guidry head up Louisiana’s 40-year-old grill manufacturer, Percy Guidry Companies. They couldn’t be happier. “It’s tough enough to keep costs down so our family can stay in business,” says Keith, “and competing with cheap Chinese products has taken a chunk out of our revenues. We thank Attorney General Caldwell for making piracy a legal priority in our state. Every little bit helps.”
“As chief attorney for the state,” says Caldwell, “our office tackles a myriad of legal fights continually. But we must do everything we can to help Louisiana businesses compete and succeed.
“Piracy in the United States hovers at 19%, according to the Business Software Alliance, but in China it’s 77% and that’s down from 92%. We’ve just led the country in succeeding with Louisiana’s law to force the Chinese to drive that piracy rate down further. And here’s why that’s important. Chinese labor rates already undercut U.S. manufacturing but if they can save another $100,000 by using illegal software, they can hire an additional 100 to 200 workers and produce even faster and cheaper. That’s essentially free labor at our expense.
“Cracking down on software piracy puts unethical global companies on notice we won’t sell their goods. This actually gives Louisiana a competitive edge over other states because companies who might move an operation here know we’ll defend them against violators.”