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November 04, 2011
McKenna, State Attorneys General Urge Feds to Tackle IT Theft

AGs say U.S. trading partners are stealing software -- and the jobs that go with it

OLYMPIA-- Foreign manufacturers are using stolen software to illegally slash costs and unfairly compete with American companies. Thirty-nine state and territorial attorneys general today asked federal authorities to use their existing powers to help strike back against such unfair competition, which costs U.S. jobs.

The attorneys general represent 36 states and 3 U.S. territories that are home to 186.2 million consumers and 184,131 manufacturing businesses with 6,720,200 employees.  These states and territories receive $801.3 billion annually in manufacturing imports from around the world.
The attorneys general are exploring ways to use their existing powers wherever they can to tackle the problem and some states such as Washington state and Louisiana have laws specifically designed to address the theft of intellectual property.

However, the attorneys general point out that the Federal Trade Commission Act, upon which Washington state and Louisiana’s statutes are based, puts the federal government in a unique position to prosecute the theft of U.S. software and other products, and called on the Federal Trade Commission (FTC) to take strong action in addition to state level efforts.

“Competition is unfairly distorted…when a manufacturer gains a cost advantage by using stolen information technology, whether in its business operations or manufacturing processes,” the attorneys general wrote in a National Association of Attorneys General letter addressed to Federal Trade commissioners and to the head of the FTC Bureau of Competition. “It offends our sense of fairness when such wrongdoers reap a commercial advantage from their illegal acts.”

Information technology includes computer databases, networking software, word processing – anything used to manage the information critical to doing business. Cutting corners by using stolen software gives foreign companies an unfair advantage over those who pay for licensed software. In addition, U.S. companies spend billions each year developing such software, which is then stolen by companies that compete for manufacturing and other jobs.

 “The theft of information technology is not a victimless crime, said Washington State Attorney General Rob McKenna. “Such theft has cost our country tens of thousands of jobs and demands a strong response.” McKenna is the president of the National Association of Attorneys General.

In emerging markets, including India, China and Mexico, the software industry  estimates more than  80 percent of all packaged business software is stolen and used by manufacturing and other firms. Ironically, India, China and Mexico are also countries to which a huge portion of U.S. manufacturing jobs have fled in recent years. A third of all manufacturing jobs were lost in the last decade alone.

The attorneys general say that by reducing IT theft by just 10 percent over four years, the United States could add 25,118 additional American jobs and more than $37 billion in Gross Domestic Product (GDP).


Contact: Janelle Guthrie, Deputy Chief of Staff/Communications Director, Washington Attorney General’s Office, 360-586-0725 or 360-584-3046

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