Continuing economic struggles and increasing globalization are putting additional pressure on U.S. companies, including those here in the San Fernando Valley, to produce cost-effective goods while keeping overhead down. To do this successfully, businesses can often find themselves working with overseas manufacturers that use unlicensed, pirated software. This hurts law-abiding companies that use legal information technology (IT) and it costs California jobs. The business community must take action to stop further losses of sales, profits, and license and royalty fees to U.S. companies. In addition to the financial implications, there is also the risk of brand name and reputation damage. The use of stolen IT is increasingly common. Almost 42 percent of the world’s software was obtained illegally, according to a 2010 study by the Business Software Alliance. This results in an estimated sales loss of roughly $60 billion in fully-licensed software. IT manufacturers continue to feel the repercussions from the use of illegal software. Specifically, the use of stolen IT costs the industry an estimated $100 billion annually in lost revenues, which leads to lost jobs and reduced economic growth for our country and local communities. California alone has witnessed the loss of almost 400,000 manufacturing and IT jobs over the last decade. These jobs have been outsourced to developing countries where piracy rates are as high as 80 percent. The IT industry was particularly crippled by the recession and companies are continuing to struggle to keep up with competitors. U.S. companies are engaged in an unfair fight, forced to compete with overseas manufacturers that use illegal IT. The Valley Industry and Commerce Association (VICA) is worried that continuing to turn a blind eye to software piracy will only make the problem worse. Significant profit and job losses will persist with the majority of the jobs relocating to other countries. The San Fernando Valley’s business community was one of the first to suffer from the use of stolen IT. We have a responsibility to companies, employees and residents to ensure businesses in the Valley and across California are able to compete on a level playing field. The state of Washington recently passed an anti-piracy law that imposes harsh punishment on those using stolen IT. The law makes it illegal for manufacturers that use pirated software to sell goods in the state. This requires companies to be responsible for verifying that their supply chains are not using pirated software. The legislation provides law-abiding manufacturers the ability to sue a competitor who uses $20,000 or more of pirated IT in their business operation. The state attorney general also has the authority to sue on behalf of injured manufacturers. A law of this kind would help crackdown on software piracy and give the state of California the tools to stop such unfair practices, better protecting law-abiding companies. The law would also help put a stop to a little-known consequence of IT theft: job losses for thousands of Californians. The Valley business community should be seriously concerned about how stolen IT will negatively impact commerce across the country and stifle economic recovery. If nothing is done by our leaders to address this problem, we will continue to see a decrease in sales, profits and jobs. VICA encourages businesses to join us in the fight against piracy. We can work together to develop a solution to protect our companies, revitalize the economy and put an end to the use of stolen IT. How do you think government can help fight information technology piracy? What steps will you take as a business owner to ensure your IT is legal? Email your responses or thoughts about the column to [email protected].
