Are rich country software companies scaremongering over alleged "pirate" IT in developing country garment exporters?

Cambodia’s Information and Communication Technology (ICT) Business Association warned garment makers of likely, potentially catastrophic,  legal action in the US  after the State of  California announced it intended suing Indian and Chinese apparel exporters manufacturerfor using unlicensed software. Without

A judgement in California’s favour could have the manufacturers barred from having goods enter California and face a fine of $2,500 “per violation”. The action was launched in January against India’s Pratibha Syntex and China’s Ningbo Beyond Home Textile by the California Attorney-General under the state’s Unfair Competition Act of 2011. California claims Pratibha Syntex had licences for using Microsoft software on four computers, but ran it on 400:  Pily Wong, president of the Cambodian  ICT Business Association,  said “US authorities are definitely very active and one day or another, some factories from Cambodia will get hit”. 

Possibly. Or is this just another cynical stunt by Microsoft (who pay Wong's salary: he is also Microsoft country manager in Cambodia) to create Fear Uncertainty and Doubt (a formally accepted part of Microsoft's marketing techniques) among honest businesses?

A California-style competition law exists so far only in California and Microsoft’s home state of Washington. There has been no court hearing on the California lawsuit so far, and – though the case has received wide publicity in the worldwide software industry - little  discussion about how a US court can obtain evidence of an act committed abroad.

It appears that Microsoft obtained information about Pratibha Syntes from an internal whistle-blower, and failed in its legal action in the Delhi High Court against the company, though it has succeeded in a number of similar suits in India. It did succeed  in forcing an inspection of Pratibha’s computers. Pratibha has now brought legal action against Microsoft in Delhi under clauses in the Indian Penal Code which criminalise fabricating false evidence. Pratibha is no fly by night: it is one of the few Asian members of the Sustainable Apparel Consortium. Unlike Microsoft, it has never been found guilty of illegally manipulating markets, or been proven to have dishonoured commitments it made to major governments

Software piracy is, of course, rife and California legislation can potentially put an Asian exporter to the US (or a subscriber to The Source) out of business even for using legitimate software on more computers than licensed: there is no clear definition of “violation”, California’s Deputy Attorney General has publicly boasted, leaving the real possibility a court might rule an offence involved a separate violation (and a separate $2,500 fine) every time someone runs Word or Excel on a computer for which it does not have a licence. But in the only attempt so far to apply the legislation against a foreign company, the State of California has made no progress after six months in even getting a date for a hearing – and Microsoft has been accused in India of criminally fabricating the evidence against Pratibha Syntex. And the IT industry’s reputation among serious business people for unsubstantiated scare-mongering has still not recovered from the Y2K anti-climax in the run up to December 31, 1999.

We are all used to corporate IT staff, and outside consultants, promulgating scare stories which turn out to be unfounded.  Though no-one can seriously argue software piracy or licence infringements are unknown in garment manufacture, no-one can argue either that the California or Washington statues have resulted in a successful case against a garment exporter. 

Inspecting suppliers for conformance to the statutes of two US states might be as pointless a waste of management time as the more absurd questionnaires buyers imposed on factories in the Y2K mass delusion.