Senators press FTC to investigate software piracy

The agency should look for ways to fight unfair competition to U.S. business from foreign firms that use pirated software, the lawmakers say

Sixteen U.S. senators have called on the U.S. Federal Trade Commission to focus on the use of pirated software by foreign manufacturers on the grounds that those companies unfairly compete with U.S. businesses.

The FTC should use its authority to investigate unfair competition to potentially expand into software piracy enforcement, the members of the Senate Small Business and Entrepreneurship Committee said in a letter to the agency sent Monday.

One factor in the decline of U.S. manufacturing is "unfair competition by unscrupulous manufacturers who use stolen American IT to compete against law-abiding U.S. companies that pay for the technology," the letter said. "This unfairness harms the affected companies and their employees as well as consumers and the broader economy."

The letter, echoing a second letter sent in November by the National Association of Attorneys General (NAAG), asks the FTC to "use all the tools" at its disposal to fight manufacturing IT piracy. Among the lawmakers signing the letter were Senator Mary Landrieu, a Louisiana Democrat and committee chairwoman, and Olympia Snowe, a Maine Republican.

The senators called on the FTC to work with state attorneys general on ways to fight foreign software piracy.

The NAAG letter refers to three unnamed U.S. companies that compete with businesses in India, China and Mexico that use millions of dollars worth of pirated software. The association asks the FTC to work with states and consider how its authority can be "brought to bear on this problem at the federal level."

The FTC hasn't pursued unfair competition cases related to software piracy, but it does have the authority to do so, said Andrew Popper, a law professor at American University in Washington, D.C. The agency could take several actions related to overseas software piracy, including raising public awareness, issuing guidance to companies, and ultimately, seizing products imported into the U.S., he said.

"There's a lot of injury in the competitive marketplace, and consumers are deceived," said Popper, who will soon publish a paper on unfair competition and piracy. "I think anybody who's looked at it realizes this is a serious problem."

But Albert Foer, president of think tank the American Antitrust Institute, questioned whether the FTC has the authority to address the issue. The agency's unfair competition authority focuses on antitrust violations, he said.

"While the FTC has the authority to conduct a study of the problem ... A I am dubious about a case arising that is susceptible to antitrust treatment," he said in an email. "An FTC report, on the other hand, could possibly be an important aid to government policy makers."

The Senate letter isn't specific about the actions the lawmakers want the FTC to take, he added. "This sounds a bit more like a plea for general political support for governmental awareness of the piracy problem than for initiation of a case investigation," he said.

The FTC had no comment on the senators' letter, but Chairman Jon Leibowitz wrote, in a letter to NAAG, that the agency is "deeply committed to exploring issues at the intersection of competition and intellectual property,"

Leibowitz thanked the group for bringing IT theft to the agency's attention, in the March 13 letter. "We are always on the lookout for ways to use our broad ... enforcement authority judiciously, yet effectively, to combat unfair methods of competition that are within the scope of our jurisdiction," he wrote.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is

Copyright © 2012 IDG Communications, Inc.

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