Indore firm penalised $100,000 for using pirated software

An Indian textile company has agreed to pay a penalty of $100,000 (Rs66 lakh) to settle the charges of using pirated software that gave it a competitive advantage over American businesses.

Headquartered in Indore, Madhya Pradesh, Pratibha Syntex Ltd exports clothes to top American companies including Walmart. As per the settlement reached, filed in Los Angeles Superior Court and has been approved by a judge, the textile company has agreed to pay the amount in restitution within 30 days.

"Pratibha Syntex engaged in illegal business practices that placed California garment companies at a disadvantage, while hurting American software companies' ability to develop new and innovative products," California Attorney General Kamala Harris said.

"Businesses around the globe should be on notice that the state of California will hold them accountable for stealing intellectual property to unfairly undercut their competition," she said.

The case assumes significance as this is first time that a US state government has secured a legally enforceable judgement against an international company for such violations.

In 2013, Harris sued Pratibha Syntex on the basis that it did not pay licensing fees for software it relied on for its business, including products manufactured by Adobe, Microsoft, and others, giving the company a significant cost advantage in the low-margin business of apparel manufacturing, shipment and sales.

Harris alleged that Pratibha Syntex gained an unfair competitive advantage over American-based companies by using pirated software in the production of clothing imported and sold in California.

Other terms of the landmark settlement prohibit Pratibha Syntex from using unlicensed software or reproducing any part of a copyrighted software program without the permission of the legitimate copyright holder, and further require the company to perform four complete audits of the software on their computers and fix any violations within 45 days, a media release said.

In addition, Pratibha Syntex must draft an information technology policy statement regarding the use of licensed software and distribute this policy to all employees, it said.

In her complaint, Harris alleged that Pratibha Syntex obtained an unfair advantage because they were able to redirect money saved by using pirated software to hire employees and invest in research and development efforts.

"Our software is a key differentiator in the business operations of the fashion industry. Companies using software without paying for it should not be rewarded with lower costs, especially when this comes at the expense of hardworking American companies," said Shahin Kohan, president of AIMS360, which designs and develops powerful and state-of-the-art software solutions for apparel manufacturers, wholesalers, and importers.

"This landmark settlement will allow us to continue innovating and help our customers grow their businesses and create new jobs," Kohan added.