Connecticut 2011 Regular Session

Connecticut House Bill HB06619 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	General Assembly Raised Bill No. 6619
2	2	January Session, 2011 LCO No. 4842
3	3	04842_______JUD
4	4	Referred to Committee on Judiciary
5	5	Introduced by:
6	6	(JUD)
7	7
8	8	General Assembly
9	9
10	10	Raised Bill No. 6619
11	11
12	12	January Session, 2011
13	13
14	14	LCO No. 4842
15	15
16	16	04842_______JUD
17	17
18	18	Referred to Committee on Judiciary
19	19
20	20	Introduced by:
21	21
22	22	(JUD)
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24	24	AN ACT CONCERNING UNFAIR BUSINESS PRACTICES.
25	25
26	26	Be it enacted by the Senate and House of Representatives in General Assembly convened:
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28	28	Section 1. (NEW) (Effective October 1, 2011) For the purposes of this section and sections 2 to 10, inclusive, of this act:
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30	30	(1) "Article or product" does not include food and beverages and any services sold, offered for sale or made available in this state, including restaurant services and any product subject to regulation by the United States Food and Drug Administration that is primarily used for medical or medicinal purposes.
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32	32	(2) "Copyrightable end product" means a work within the subject matter of copyright as specified by Section 102 of the United States Copyright Act.
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34	34	(3) "Manufacture" means to manufacture, produce or assemble an article or product subject to section 2 of this act, in whole or substantial part, but does not include contracting with or otherwise engaging another person, or that person engaging another person, to develop, manufacture, produce or assemble an article or product subject to section 2 of this act.
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36	36	(4) "Material competitive injury" means at least a three per cent price difference between the article or product made in violation of section 2 of this act designed to harm competition and a directly competing article or product that was manufactured without the use of stolen or misappropriated information technology, such price difference occurring over a four-month period of time.
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38	38	(5) "Retail price" of stolen or misappropriated information technology is the retail price of the information technology charged at the time of, and in the jurisdiction where, the alleged theft or misappropriation occurred, multiplied by the number of stolen or misappropriated items used in the business operations of the person alleged to have violated section 2 of this act.
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40	40	(6) "Stolen or misappropriated information technology" means hardware or software that the person referred to in section 2 of this act acquired, appropriated or used without the authorization of the owner of the information technology in violation of applicable law, but does not include situations in which the hardware or software alleged to have been stolen or misappropriated was not available for retail purchase on a standalone basis at or before the time it was acquired, appropriated or used by such person.
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42	42	Sec. 2. (NEW) (Effective October 1, 2011) Any person who manufactures any article or product while using stolen or misappropriated information technology in its business operations after notice and opportunity to cure as provided in section 5 of this act and, with respect to remedies sought under subsection (e) of section 6 of this act or section 7 of this act, causes a material competitive injury as a result of such use of stolen or misappropriated information technology, shall be deemed to engage in an unfair act where such article or product is sold or offered for sale in this state, either separately or as a component of another article or product, and in competition with an article or product that was manufactured without violating this section. Any person who engages in such unfair act, and any articles or products manufactured by such person in violation of this section, shall be subject to the liabilities and remedial provisions of sections 1 to 10, inclusive, of this act in an action by the Attorney General or any person described in subsection (d) of section 6 of this act, except as provided in sections 3, 4, 5 and 8 of this act. For the purposes of this section, information technology shall be considered to be used in a person's business operations if the person uses such technology in the manufacture, distribution, marketing or sale of the articles or products subject to this section.
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44	44	Sec. 3. (NEW) (Effective October 1, 2011) No action may be brought under sections 1 to 10, inclusive, of this act, and no liability shall result, where:
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46	46	(1) The end article or end product sold or offered for sale in this state and alleged to violate section 2 of this act is: (A) A copyrightable end product; (B) merchandise manufactured by or on behalf of, or pursuant to a license from, a copyright owner, and which displays or embodies a name, character, artwork or other indicia of or from a work that falls within subparagraph (A) of this subdivision, or merchandise manufactured by or on behalf of, or pursuant to a license from, a copyright or trademark owner and which displays or embodies a name, character, artwork or other indicia of or from a theme park, theme park attraction or other facility associated with a theme park; or (C) packaging, carrier media or promotional or advertising materials for any end article, end product or merchandise that falls within subparagraph (A) or (B) of this subdivision;
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48	48	(2) The allegation that the information technology is stolen or misappropriated is based on a claim that (A) the use of such information technology infringes a patent or misappropriates a trade secret under applicable law, or (B) could be brought under any provision of Title 35 of the United States Code;
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50	50	(3) The allegation that the information technology is stolen or misappropriated is based on a claim that the defendant's use of the information technology violates the terms of a license that allows users to modify and redistribute any source code associated with the technology free of charge; or
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52	52	(4) The allegation is based on a claim that the person violated section 2 of this act by aiding, abetting, facilitating or assisting someone else to acquire, appropriate or use, or by providing someone else with access to, information technology without authorization of the owner of such information technology in violation of applicable law.
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54	54	Sec. 4. (NEW) (Effective October 1, 2011) No injunction may issue against a person other than the person alleged to violate section 2 of this act, and no attachment order may issue against articles or products other than articles or products in which the person alleged to violate section 2 of this act holds title. A person other than the person alleged to violate section 2 of this act includes any person who contracts with or otherwise engages another person to develop, manufacture, produce, market, distribute, advertise or assemble an article or product alleged to violate section 2 of this act.
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56	56	Sec. 5. (NEW) (Effective October 1, 2011) (a) No action may be brought under sections 1 to 10, inclusive, of this act unless the person subject to section 2 of this act received written notice of the alleged use of the stolen or misappropriated information technology from the owner or exclusive licensee of the information technology or the owner's agent and the person: (1) Failed to establish that its use of the information technology in question did not violate section 2 of this act; or (2) failed, within ninety days after receiving such notice, to cease use of the owner's stolen or misappropriated information technology, provided, if the person commences and thereafter proceeds diligently to replace such information technology with information technology whose use would not violate section 2 of this act, such period shall be extended for an additional period not to exceed one hundred days total. The information technology owner or its agent may extend any period described in this subsection.
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58	58	(b) To satisfy the requirements of subsection (a) of this section, a written notice must: (1) Identify the stolen or misappropriated information technology; (2) identify the lawful owner or exclusive licensee of the information technology; (3) identify the applicable law the person is alleged to be violating and state that the notifier has a reasonable belief that the person has acquired, appropriated or used the information technology in question without authorization of the lawful owner in violation of such applicable law; (4) if known by the notifier, state the manner in which such information technology is being used by the person; (5) state the articles or products to which such information technology relates; and (6) specify the basis and the particular evidence upon which the notifier bases such allegation.
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60	60	(c) The notification shall state, under penalty of perjury, that the information in the notice is accurate based on the notifier's good faith knowledge, information and belief.
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62	62	Sec. 6. (NEW) (Effective October 1, 2011) (a) No earlier than ninety days after the provision of notice in accordance with section 5 of this act, the Attorney General, or a person described in subsection (d) of this section, may bring an action against any person that is subject to section 2 of this act:
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64	64	(1) To enjoin violation of section 2 of this act, including by enjoining any such person from selling or offering to sell in this state articles or products that are subject to section 2 of this act.
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66	66	(2) Only after a determination by the court that the person has violated section 2 of this act, to recover the greater of:
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68	68	(A) Actual damages, which may be imposed only against the person who violated section 2 of this act; or
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70	70	(B) Statutory damages of no more than three times the retail price of the stolen or misappropriated information technology, which may be imposed only against the person who violated section 2 of this act.
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72	72	(b) (1) After determination by the court that a person has violated section 2 of this act and entry of a judgment against the person for violating section 2 of this act, the Attorney General, or a person described in subsection (d) of this section, may add to the action a claim for actual damages against a third party who sells or offers to sell in this state articles or products made by that person in violation of section 2 of this act, subject to the provisions of section 8 of this act; provided, damages may be imposed against a third party only if:
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74	74	(A) The third party was provided a copy of a written notice sent to the person alleged to have violated section 2 of this act that satisfies the requirements of section 5 of this act at least ninety days prior to the entry of the judgment;
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76	76	(B) The person who violated section 2 of this act did not make an appearance or does not have sufficient attachable assets to satisfy a judgment against it;
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78	78	(C) Such person either manufactured the final article or product or produced a component equal to thirty per cent or more of the value of the final article or product; and
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80	80	(D) Such person has a direct contractual relationship with the third party respecting the manufacture of such final article or product or component.
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82	82	(2) An award of damages against such third party pursuant to subdivision (1) of this subsection shall be the lesser of the retail price of the stolen or misappropriated information technology at issue or two hundred fifty thousand dollars.
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84	84	(c) In an action under this section, a court may:
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86	86	(1) Against the person found to have violated section 2 of this act, increase the damages up to three times the damages authorized by subdivision (2) of subsection (a) of this section where the court finds that the person's use of the stolen or misappropriated information technology was wilful;
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88	88	(2) With respect to an award under subdivision (2) of subsection (a) of this section only, award costs and reasonable attorney's fees to (A) a prevailing plaintiff in actions brought by an injured person under section 2 of this act; or (B) a prevailing defendant in actions brought by an injured person; and
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90	90	(3) With respect to an action under subsection (b) of this section brought by a private plaintiff only, award costs and reasonable attorney's fees to a third party who qualifies for an affirmative defense under section 8 of this act; provided, with respect to a third party's reliance on the affirmative defenses set forth in subdivisions (3) and (4) of subsection (a) of section 8 of this act, the court may award costs and reasonable attorney's fees only if all of the conduct on which the affirmative defense is based was undertaken by the third party before the plaintiff initiated the action pursuant to subsection (b) of this section.
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92	92	(d) A person shall be deemed to have been injured by the sale or offer for sale of an article or product subject to section 2 of this act if the person establishes by a preponderance of the evidence that:
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94	94	(1) The person manufactures articles or products that are sold or offered for sale in this state in competition with articles or products that are subject to section 2 of this act;
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96	96	(2) The person's articles or products were not manufactured using stolen or misappropriated information technology in violation of section 2 of this act; and
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98	98	(3) The person suffered economic harm, which may be shown by evidence that the retail price of the stolen or misappropriated information technology was twenty thousand dollars or more.
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100	100	(e) If the court determines that a person found to have violated section 2 of this act lacks sufficient attachable assets in this state to satisfy a judgment rendered against it, the court may enjoin the sale or offering for sale in this state of any articles or products subject to section 2 of this act, except as provided in section 4 of this act.
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102	102	(f) The court shall determine whether a cure period longer than the period reflected in section 5 of this act would be reasonable given the nature of the use of the information technology that is the subject of the action and the time reasonably necessary either to bring such use into compliance with applicable law or to replace the information technology with information technology that would not violate section 2 of this act. If the court deems that a longer cure period would be reasonable, then the action shall be stayed until the end of that longer cure period. If by the end of that longer cure period, the defendant has established that its use of the information technology in question did not violate section 2 of this act, or the defendant ceased use of the stolen or misappropriated information technology, then the action shall be dismissed.
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104	104	Sec. 7. (NEW) (Effective October 1, 2011) In a case in which the court is unable to obtain personal jurisdiction over a person subject to section 2 of this act, the court may proceed in rem against any articles or products alleged to be subject to section 2 of this act, including any articles or products sold or offered for sale in this state. Except as provided in section 4 of this act, all such articles or products shall be subject to attachment at or after the time of filing a complaint, regardless of the availability or amount of any monetary judgment.
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106	106	Sec. 8. (NEW) (Effective October 1, 2011) (a) A court may not award damages against any third party pursuant to subsection (b) of section 6 of this act where that party, after having been afforded reasonable notice of at least ninety days and opportunity to plead any of the affirmative defenses set forth below, establishes by a preponderance of the evidence that:
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108	108	(1) Such person is the end consumer or end user of an article or product subject to section 2 of this act, or acquired the article or product after its sale to an end consumer or end user;
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110	110	(2) Such person is a business with annual revenues not in excess of fifty million dollars;
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112	112	(3) The person acquired the articles or products:
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114	114	(A) In good faith reliance on either (i) a code of conduct or similar written document that governs the person's commercial relationships with the manufacturer alleged to have violated section 2 of this act and which includes commitments, such as commitments to comply with applicable laws, that prohibit use of the stolen or misappropriated information technology by such manufacturer, or (ii) written assurances from the manufacturer of such articles or products that such articles or products, to the manufacturer's reasonable knowledge, were manufactured without the use of stolen or misappropriated information technology in the manufacturer's business operations; provided, with respect to both clauses (i) and (ii) of this subparagraph, that within one hundred eighty days of receiving written notice of the judgment against the manufacturer for violation of section 2 of this act and a copy of a written notice that satisfies the requirements of section 5 of this act, the person undertakes commercially reasonable efforts to: (I) Exchange written or electronic correspondence confirming that such manufacturer is not using such stolen or misappropriated information technology in violation of section 2 of this act, which may be satisfied, without limitation, by obtaining written assurances from the manufacturer accompanied by copies of invoices, purchase orders, licenses or other verification of lawful use of the information technology at issue; (II) direct the manufacturer to cease the theft or misappropriation, which may be satisfied, without limitation, by the third party issuing a written directive to the manufacturer demanding that it cease such theft or misappropriation and demanding that the manufacturer provide the third party with copies of invoices, purchase orders, licenses or other verification of lawful use of the information technology at issue; or (III) in a case in which the manufacturer has failed to cease the theft or misappropriation within such one-hundred-eighty-day period, prevent the future acquisition of such articles or products from such manufacturer during the period that such manufacturer continues to engage in such theft or misappropriation subject to section 2 of this act where doing so would not constitute a breach of an agreement between the person and such manufacturer for the manufacture of the articles or products in question that was entered into on or before one hundred eighty days after the effective date of this section; or
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116	116	(B) Pursuant to an agreement between the person and a manufacturer for the manufacture of the articles or products in question that was entered into before one hundred eighty days after the effective date of this section; provided, within one hundred eighty days of receiving written notice of the judgment against the manufacturer for violation of section 2 of this act and a copy of a written notice that satisfies the requirements of section 5 of this act, the person undertakes commercially reasonable efforts to: (i) Obtain from such manufacturer written assurances that such manufacturer is not using such stolen or misappropriated information technology in violation of section 2 of this act, which may be satisfied, without limitation, by obtaining written assurances from the manufacturer accompanied by copies of invoices, purchase orders, licenses or other verification of lawful use of the information technology at issue; (ii) direct the manufacturer to cease such theft or misappropriation, which may be satisfied, without limitation, by the third party issuing a written directive to the manufacturer demanding that it cease such theft or misappropriation and demanding that the manufacturer provide the third party with copies of invoices, purchase orders, licenses or other verification of lawful use of the information technology at issue; or (iii) in a case in which the manufacturer has failed to cease such theft or misappropriation within such one-hundred-eighty-day period, cease the future acquisition of such articles or products from such manufacturer during the period that such manufacturer continues to engage in such theft or misappropriation subject to section 2 of this act where doing so would not constitute a breach of such agreement;
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118	118	(4) The person has made commercially reasonable efforts to implement practices and procedures to require its direct manufacturers, in manufacturing articles or products for such person, not to use stolen or misappropriated information technology in violation of section 2 of this act. A person may satisfy this subdivision by:
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120	120	(A) Adopting and undertaking commercially reasonable efforts to implement a code of conduct or similar written requirements, which are applicable to the person's direct manufacturers, that prohibit use of stolen or misappropriated information technology by such manufacturer, subject to a right of audit, and such person either (i) has a practice of auditing its direct manufacturers on a periodic basis in accordance with generally accepted industry standards, or (ii) requires in its agreements with its direct manufacturers that they submit to audits by a third party, which may include a third party association of businesses representing the owner of the stolen or misappropriated information technology, and further provides that a failure to remedy any deficiencies found in such audit that constitute a violation of applicable law of the jurisdiction where the deficiency occurred shall constitute a breach of the contract, subject to cure within a reasonable period of time; or
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122	122	(B) Adopting and undertaking commercially reasonable efforts to implement a code of conduct or similar written requirements, which are applicable to the person's direct manufacturers, that prohibit use of stolen or misappropriated information technology by such manufacturer, and the person undertakes practices and procedures to address compliance with the prohibition against the use of the stolen or misappropriated information technology in accordance with the applicable code of conduct or written requirements; or
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124	124	(5) The person does not have a contractual relationship with the person alleged to have violated section 2 of this act respecting the manufacture of the articles or products alleged to have been manufactured in violation of section 2 of this act.
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126	126	(b) The court shall not enforce any award for damages against such third party until after the court has ruled on that party's claim of eligibility for any of the affirmative defenses set out in subsection (a) of this section. Any confidential or otherwise sensitive information submitted by a party pursuant to subsection (a) of this section may be subject to a protective order for good cause shown.
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128	128	Sec. 9. (NEW) (Effective October 1, 2011) A court may not enforce an award of damages against a third party pursuant to subsection (b) of section 6 of this act for a period of eighteen months after the effective date of this section.
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130	130	Sec. 10. (NEW) (Effective October 1, 2011) A violation of section 2 of this act may not be considered an unfair trade practice and chapter 735a of the general statutes does not apply to a violation of section 2 of this act. The remedies provided by sections 1 to 9, inclusive, of this act are the exclusive remedies for the parties.
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135	135	This act shall take effect as follows and shall amend the following sections:
136	136	Section 1 October 1, 2011 New section
137	137	Sec. 2 October 1, 2011 New section
138	138	Sec. 3 October 1, 2011 New section
139	139	Sec. 4 October 1, 2011 New section
140	140	Sec. 5 October 1, 2011 New section
141	141	Sec. 6 October 1, 2011 New section
142	142	Sec. 7 October 1, 2011 New section
143	143	Sec. 8 October 1, 2011 New section
144	144	Sec. 9 October 1, 2011 New section
145	145	Sec. 10 October 1, 2011 New section
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147	147	This act shall take effect as follows and shall amend the following sections:
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149	149	Section 1
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151	151	October 1, 2011
152	152
153	153	New section
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155	155	Sec. 2
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157	157	October 1, 2011
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159	159	New section
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161	161	Sec. 3
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163	163	October 1, 2011
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165	165	New section
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167	167	Sec. 4
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169	169	October 1, 2011
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171	171	New section
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173	173	Sec. 5
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175	175	October 1, 2011
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177	177	New section
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179	179	Sec. 6
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181	181	October 1, 2011
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183	183	New section
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185	185	Sec. 7
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187	187	October 1, 2011
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189	189	New section
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191	191	Sec. 8
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193	193	October 1, 2011
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195	195	New section
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197	197	Sec. 9
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199	199	October 1, 2011
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201	201	New section
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203	203	Sec. 10
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205	205	October 1, 2011
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207	207	New section
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209	209	Statement of Purpose:
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211	211	To authorize an action against businesses that use stolen or misappropriated information technology to manufacture products that are sold or offered for sale in this state in competition with products manufactured without using stolen or misappropriated information technology.
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213	213	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]