As of Wednesday, December 30, 2015
California’s attorney general has won a settlement from a clothing factory in India accused of stealing intellectual property from U.S. software companies.
Pratibha Syntex Ltd., founded in 1997 in the Indian city of Indore, was accused of not paying licensing fees for software from companies including Microsoft Corp. and Adobe Systems Inc.
California Attorney General Kamala Harris sued Pratibha in Los Angeles County Superior Court in 2013 for IP theft, charging the company with not paying for software that helped run the manufacturer’s enormous apparel facility in India, which has more than 3,500 sewing machines and can make up to 56 million garments a year. Much of its clothing is exported to the United States.
The complaint alleged that Pratibha obtained an unfair advantage because it was able to redirect money saved by using pirated software to hire employees and invest in research-and-development efforts.
To end the lawsuit, Pratibha agreed to pay a $100,000 settlement and finish four audits of its software and fix any violations in 45 days. Under the settlement, Pratibha did not admit to violating the state’s unfair-competition laws.
“Pratibha Syntex engaged in illegal business practices that placed California garment companies at a disadvantage while hurting American software companies’ ability to develop new and innovative products,” Harris said in a statement. “Businesses around the globe should be on notice that the state of California will hold them accountable for stealing intellectual property to unfairly undercut their competition.”
This marks the first time a state has secured an enforceable judgment against an international company for these kinds of violations, the attorney general’s office said in a statement.
“Our software is a key differentiator in the business operations of the fashion industry. Companies using software without paying for it should not be rewarded with lower costs, especially when this comes at the expense of hardworking American companies,” said Shahin Kohan, president of Los Angeles–based AIMS360, which designs and develops state-of-the-art software solutions for apparel manufacturers, wholesalers and importers. “This landmark settlement will allow us to continue innovating and help our customers grow their businesses and create new jobs.”
California’s apparel industry, which is largely based in Los Angeles County, employed nearly 100,000 people in 2012 to 2013. A 2011 study by the Orange County Business Council found that California had 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 resulted in a loss of $1.6 billion in economic activity and $700 million in tax revenue for California.