Auto industry, exporters warned of tough US law

The Open Computing Alliance (OCA) recently held a workshop for business leaders in the auto sector, to warn them of charges of unfair competition in the US if they used illegal software.

Thai companies in the supply chain are the target given Japan's leadership in the auto sector, and a number of recent cases against Japanese companies over software piracy in Thailand. The international agency for intellectual property and trade last week urged major automotive companies to ensure that their supply-chain adheres to Thailand's laws with respect to software licensing and usage.

OCA has issued similar pleas for compliance with intellectual property laws in Thailand, but has now turned its focus to Thailand's robust automotive sector, and is urging the auto sector leadership to manage its software assets.

OCA secretary-general for Asia Pacific, Michael Mudd, warned exporters in Japan as well as their operations in China, Thailand and across Asia about the more intense enforcement of the unfair competition laws in the US. These laws require US trade partners to use only legitimate IT in all business operations or risk seizure of their products at US ports.

"Perhaps a better way to look at it is to look at what the law is intended to achieve and then examine the opportunities for Japanese exporters, including those with plants in third countries, such as China or Thailand, which may also be impacted by these laws," said Mudd. "The United States is a major trading partner of Japan, with exports of manufactured goods reaching US$135 billion in 2012."

The warning from OCA followed the recent move by California attorney-general Kamala Harris, who invoked the California Unfair Competition Law to address the harm caused to local businesses by the import of manufactured products using unlicensed software. She filed lawsuits against two apparel manufacturers - China-based Ningbo Beyond Home Textile Co, and India-based Pratibha Syntex, and their affiliate companies. Both companies face fines that could amount to hundreds of thousands of dollars based on similar cases of software copyright violations in California.

According to independent reports, the use of illegal software worldwide cost copyright owners more than $63 billion in 2011. In commercial software, the value of illegal software used in Asia was the highest. The world's largest manufacturing centre, China, has a piracy rate of 77 per cent. In other regional manufacturing centres the software piracy rates are 72 per cent for Thailand, 86 per cent in Indonesia and 81 per cent in Vietnam. "Major centres of Japanese investment in manufacturing and exports to the US are at risk unless IP compliance is enforced by robust audit," Mudd said.

Because US lawmakers are now aggressively looking at the business practices of international manufacturers in an effort to protect American jobs, legal experts say enforcement of the laws have begun against infringing manufacturers around the world in order to level the playing field for US manufacturers.

In a speech emphasising trade issues, US President Barack Obama said he would enforce a fair trade policy, stating that "it's not right when another country lets our movies, music, and software be pirated. It's not fair when foreign manufacturers have a leg up on ours only because they're heavily subsidised."

In Thailand, police officials and the Department of Intellectual Property have proactively warned exporters and manufacturers of the implications of UCA.

"It is clear that the prudent thing for manufacturers to do is to ensure that their software is compliant with Thailand's copyright laws," the Economic Crime Division deputy commander Chainarong Charoenchainao said. "I have genuine concern for Thailand's manufacturers. In this group, I include Thai companies and multinational companies using Thailand as a manufacturing base." This will complement efforts by Thailand's law enforcement agencies, including the Department of Intellectual Property and the Economic Crime Division, to help further reduce software piracy in Thailand.

"This growing trend will enhance the competitive edge of companies that are using only legitimate IT in all of their business activities," said Tilleke & Gibbons attorney Wiramrudee Mokkhavesa. "In fact, any company that strictly follows Thai copyright laws will not only comply with unfair competition law requirements but will also benefit from the law in terms of business competition and international acceptance." Since 2006, Thailand's PC software piracy rate has fallen from 80 per cent to 72 per cent in 2011. This is among the fastest rates of reduction in Asia, putting Thailand behind only Hong Kong.