Relates to the illegal use of stolen or misappropriated computer software

BILL NUMBER:S856

Title of bill

An act to amend the general business law, in relation to stolen or misappropriated computer software

Purpose of the bill

To make it unlawful for a person to develop or manufacture a product or supply services using stolen or misappropriated software.

Summary of specific provisions

This bill adds a new §390-d to the General Business Law to make it unlawful for a person to develop or manufacture a product or supply services using stolen or misappropriated software, including software that does not have the necessary license agreements.

The Attorney General and third parties adversely affected by reason of a violation of this section, are empowered to enjoin further violation and to recover actual damages, including treble damages upon a showing of a Pattern or practice of violating the provisions of this law.

Justification

When businesses, including businesses in foreign countries, use stolen software to make products or supply services that are offered to New York consumers, they gain an unfair competitive advantage over businesses that use legal, properly licensed software. This radically tilts the competitive playing field by rewarding businesses that break the law costing New York businesses billions of dollars and costing New York State and local governments hundreds of millions of dollars in direct revenue.

Although federal copyright law allows software companies to combat the act of software theft, there are currently few avenues to address the harms to competition that flow from the use of stolen software.

This measure provides a crucial new tool to go after those who use stolen or pirated software to hurt competitors, not just software pirates. It does so by making the use of stolen/pirated software to create and sell products unlawful, giving the Attorney General and adversely-affected parties the enforcement tools to stop and punish those who use stolen goods to harm New York businesses. Moreover, it makes law-breakers liable not only for the first item sold, but also for the full extent of the product or services made and sold based on the stolen software.

The need for additional tools to combat the economic damage caused by the illegal use of stolen software is obvious. In 2008, worldwide software piracy was pegged at 41 percent representing losses of over $50 billion. Yet, the real economic damage reaches well beyond the piracy itself; it extends to the very fabric of the use of intellectual property

in the development of the innovative products and services. It means fewer jobs in New York, less innovation, hundreds of millions of dollars in lost tax revenue and reduced economic growth overall.

This measure will provide the State, through the Attorney General, and the companies that are adversely affected, the legal construct to fight back against this pernicious use of stolen computer software and the intellectual property behind it.

Prior legislative history

2011-12: S.5089 - Died in Consumer Protection 2009-10: (A.11395-A) Amended and recommitted to Economic Development

Fiscal implications

According to a 2007 study, software piracy alone costs New York taxing jurisdictions more than $344M in lost tax revenue alone. This bill is a saves revenue

Effective date

This act shall take effect 90 days after it becomes law.