A relatively new legislation on unfair competition, which has been adopted in the U.S., in particular – in two U.S. states – Washington and Louisiana (hereinafter referred to as the Unfair Competition Act also known as “UCA“) seems to be still highly underestimated by Polish entrepreneurs. The ongoing ignorance of software and hardware management in Polish companies planning to do business in the U.S. may not only reduce their competitiveness in the international arena towards foreign competitors, but also prevent getting a new market in the USA. The above mentioned ignorance of the exporters to the U.S. using illegal software can lead to specific business losses and end the relationship with partners from the U.S., not to mention the negative effects of marketing and financial services. So let me bring the basic framework of UCA and indicate their business rationality, emphasizing the necessity of implementation of the programs by Polish undertakings in the field of IT compliance.
UCA as the crucial element of unfair competition in the U.S.
UCA has been adopted in two U.S. states so far (Washington and Louisiana are mentioned as the examples for comprehensive legislation on unfair competition in order to prevent IT theft) and is a special legislation that strikes at businesses that use, directly or indirectly, illegal information technology (IT) in the production of goods, and offering for sale or selling such goods. The aim of UCA is to: 1) level the playing field of competing businesses; and 2) give the entrepreneurs which are aware of property rights and legally use of IT resources legal remedies against the entrepreneurs who simply steal IT.
So it’s not merely about ethical business conduct, but the effective penalization and prevention of IT theft. There is no doubt that companies using illegal software or hardware have the competitive advantages (they have lower production costs) over the companies properly, legally and fairly managing IT. U.S. legislation is aimed towards the protection of these entrepreneurs which through innovation and the use of legal tools may be the victims of dishonesty as a result of illegal and corrupt activities of their competitors.
The essence of UCA
Broadly speaking, UCA considers as an unfair competition act – the production or manufacture of products (goods) that are offered for sale in the state of Washington or Louisiana, and are competitive in comparison to other products if they are produced using illegal or stolen software or hardware.
The new legislation introduced civil penalties for the sale of products made by the company in the absence of respect for IT. UCA gives competitors (suffering as a result of an act of unfair competition used by a competitor) or Attorney General of Washington State (Attorney General State of Louisiana State in the case of sale of goods in Louisiana) to take legal action against civil law companies that violate the UCA and the ability to obtain a ban on the sale products by using illegal software undertakings.
What is important, according to the relevant provisions of the UCA, manufacturers selling products in the states of Washington and Louisiana are at risk of sanctions not only when they use illegal IT resources by themselves, but also if their subcontractors use the illegal IT.
A potential case scenario
Imagine a Polish undertaking X producing construction machinery that imports parts for machines (for economic reasons) from China and India. Polish undertaking uses pirated software Excel and WORD while in the process of purchasing and accounts of the partners in China and India. Contractor Y from Washington State wants to buy equipment from X due to the fact that X has machines at a price cheaper than the entrepreneur U (let me add that U produces machines in Florida and does not use illegal software). Y and X conclude a distribution agreement for the sale of construction machinery. The products will be delivered to the State of Washington. The Polish undertaking violates the provisions of UCA and is sued by U. If the Polish undertaking, for example, ignores the lawsuit, then distributor of construction equipment in the state of Washington (firm Y) can be sued up to the amount of $ 250,000.00 while in relation to X can be ordered ban on the sale of machinery in the state of Washington (ad rem jurisdiction). As a result, the U.S. contractor at the end of the day may end up without products, and stands before the payment of $ 250,000.
Although the example given above may be exaggerated, it is the fact that the adoption of UCA results in different approach of American undertakings in the establishment of business relations with undertakings for which there is suspicion of using illegal IT.
Tips for Polish entrepreneurs
The recommended action for Polish exporters to the U.S., or companies that wish to establish business relationships with U.S. partners is to carry out a comprehensive audit of the use of IT.
The purpose of the audit would be to confirm that these companies and their contractors (such as parts suppliers) in the production process uses legal software and hardware in accordance with the relevant terms and conditions of licenses. T
he next part would be dedicated to the implementation of compliance programs in the field of software management, which would meet the growing demands of sound management of IT in the world and affect the perception of Polish entrepreneurs as fair and legitimate contractors.