Bill Text: AZ SB1529 | 2011 | Fiftieth Legislature 1st Regular | Introduced

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Bill Title: Stolen information technology; unfair competition

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2011-02-02 - Referred to Senate CE Committee [SB1529 Detail]

Download: Arizona-2011-SB1529-Introduced.html

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REFERENCE TITLE: stolen information technology; unfair competition

 

 

 

 

State of Arizona

Senate

Fiftieth Legislature

First Regular Session

2011

 

 

SB 1529

 

Introduced by

Senator Melvin

 

 

AN ACT

 

amending title 44, chapter 10, Arizona Revised Statutes, by adding article 11; relating to stolen or misappropriated information technology.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 

Be it enacted by the Legislature of the State of Arizona:

Section 1.  Title 44, chapter 10, Arizona Revised Statutes, is amended by adding article 11, to read:

ARTICLE 11.  STOLEN OR MISAPPROPRIATED

INFORMATION TECHNOLOGY

START_STATUTE44-1581.  Definitions

In this article, unless the context otherwise requires:

1.  "Article or product" does not include any services sold or offered for sale in this state.

2.  "Manufacture" means to develop, manufacture, produce or assemble an article or product, in whole or substantial part, but does not include contracting with or otherwise engaging another person to develop, manufacture, produce or assemble an article or product.

3.  "Stolen or misappropriated information technology" means any hardware or software that a person acquired, appropriated or used in violation of applicable law but does not include hardware or software that was not available for retail purchase on a stand-alone basis at or before the time it was acquired, appropriated or used by the person.

4.  "Used in the business operations" means to use information technology to support in any way the design, manufacture, distribution, marketing or sales of an article or product subject this article. END_STATUTE

START_STATUTE44-1582.  Unfair competition; notice; damages; injunctive relief

A.  A person engages in unfair competition if the person manufactures any article or product while using stolen or misappropriated information technology in its business operations and the 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 the use of the stolen or misappropriated information technology.

B.  A person does not engage in unfair competition and is not liable if any of the following applies:

1.  The end product or article sold or offered for sale in this state is a copyrightable work under the United States copyright act.

2.  The allegation that the information technology is stolen or misappropriated is based on a claim that the information technology infringes on a patent or trade secret under applicable law or that could be brought under title 35 of the United States Code.

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.

C.  An action may not be commenced pursuant to this section unless the person subject to this section receives a written notice of the alleged use of the stolen or misappropriated information technology from the owner of the information technology or the owner's authorized representative and the person fails to cease using the owner's stolen or misappropriated information technology within ninety days after receiving the notice, subject to any extension approved in writing by the information technology owner or the owner's authorized representative.  The written notice shall do all of the following:

1.  Identify the stolen or misappropriated information technology.

2.  Identify the lawful owner of the information technology.

3.  State that the notifier has a reasonable belief that the person has acquired, appropriated or used the information technology in question in violation of applicable law.

4.  State, if known by the notifier, the manner that the information technology is being used by the person.

D.  At least ninety days after notice is given pursuant to subsection C of this section, the attorney general, any person who is injured by a violation of subsection A of this section or any association of businesses representing any such person may bring an action against any person, article or product that is subject to subsection A to either:

1.  Enjoin the violation, including enjoining the person from selling or offering to sell in this state articles or products that are subject to subsection A of this section.

2.  Recover the greater of:

(a)  Actual damages.

(b)  If the court finds that the value of the stolen or misappropriated information technology at issue was material, statutory damages of not more than three times the retail value of the stolen or misappropriated information technology.

E.  In an action under this section, the court may do either of the following:

1.  Increase the damages up to three times the damages authorized by subsection D, paragraph 2 of this section if the court finds that the defendant's use of the stolen or misappropriated information technology was willful.

2.  Award costs and reasonable attorney fees to either:

(a)  A prevailing plaintiff in all actions brought under subsection A of this section.

(b)  A prevailing defendant in actions brought by an injured person.

F.  In an action for injunctive relief under this section, irreparable harm and interim harm to the plaintiff is presumed if the court finds that the articles or products subject to subsection A of this section are being sold or offered for sale in this state.

G.  A person is injured by the sale or offer for sale of an article or product subject to subsection A of this section if the person establishes by a preponderance of the evidence that both:

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 subsection A of this section.

2.  The person's articles or products were not manufactured using the  stolen or misappropriated information technology in violation of subsection A of this section.

H.  In an action under this section, the use of stolen or misappropriated information technology may be established from the business records of a person subject to subsection A of this section by evidence derived from techniques used by the information technology owner to establish the use of stolen or misappropriated information technology or by other competent evidence.

I.  Beginning eighteen months after the effective date of this section and except as provided in subsection K of this section, if the court determines that a person who violated subsection A of this section lacks sufficient attachable assets in this state to satisfy a judgment rendered against it, the court shall enjoin the sale or offering for sale in this state of any articles or products subject to subsection A of this section.  Any third party who is served with or who is otherwise subject to an order for injunctive relief issued pursuant to this section shall be afforded reasonable notice of not less than ninety days and any affirmative defense raised pursuant to subsection K of this section shall be decided before the injunction may be enforced against that third party.

J.  Beginning eighteen months after the effective date of this section, the court may proceed in rem against any articles or products alleged to be subject to subsection A of this section, including any articles or products sold or offered for sale in this state.  Except as provided in subsection K of this section, all such articles or products are subject to attachment on or after the filing of a complaint, regardless of the availability or amount of any monetary judgment, of who has title to the articles or products and of the existence of the grounds specified in section 12-1521.  Absent good cause shown, the amount of any bond filed pursuant to this subsection shall be ten thousand dollars.  Except as provided in subsection K of this section, if a court determines that any such articles or products violate subsection an of this section, the court, acting in rem, shall enjoin the sale  or offer for sale in this state of the articles or products.  A third party who is served with or who is otherwise subject to an order for attachment or injunction shall be afforded reasonable notice of not less than ninety days and any affirmative defense raised pursuant to subsection K of this section shall be decided before an attachment order may be enforced against that third party.

K.  A court may not enforce an order for attachment or injunctive relief under subsection I or J of this section against a person, other than the manufacturer of the articles or products, who has an interest in an article or product subject to subsection A of this section if the third party establishes by a preponderance of the evidence that the third party:

1.  Is the end consumer of an article or product subject to the order or acquired the article or product after its sale to an end consumer.

2.  Is a business with annual revenues of less than fifty million dollars.

3.  Acquired the articles or products in good faith reliance on either a code of conduct or a similar written document that governs the third party's commercial relationships with the manufacturer alleged to have violated subsection A of this section and that includes commitments that prohibit use of the stolen or misappropriated information technology at issue by such manufacturer or on written assurances from the manufacturer or supplier of the articles or products that the articles or products, to the best of the manufacturer's or supplier's knowledge, were manufactured without the stolen or misappropriated information technology being used in the business operations of the manufacturer or supplier if within one hundred eighty days of receiving service under subsection I or J of this section or receiving a written notice that satisfies the requirements of subsection C of this section, the third party uses commercially reasonable efforts to implement commercially reasonable practices and procedures to cause the manufacturer or supplier to cease such theft or misappropriation or to prevent future acquisition of articles or products from the manufacturer or supplier subject to subsection A of this section.

4.  Has made commercially reasonable efforts to prevent the acquisition of articles or products subject to subsection A of this section by acting in good faith to require its manufacturers and suppliers not to use stolen or misappropriated information technology in a manner that would violate subsection A of this section and using commercially reasonable efforts to implement such practices and procedures to prevent acquisition of such articles and products.  A third party may satisfy this paragraph by demonstrating that its contracts with direct manufacturers, or codes of conduct or similar written documents to which the third party adheres and which apply to direct manufacturers, prohibit the use of the stolen or misappropriated information technology at issue by the manufacturer, subject to a general right of audit, and the third party has a practice of auditing its direct manufacturers on a periodic basis according to generally accepted industry standards.

5.  Does not have a contractual relationship with the person who is alleged to have violated subsection A of this section with respect to the manufacture or supply of the articles or products that are alleged to have been manufactured in violation of subsection A of this section. END_STATUTE

START_STATUTE44-1583.  Inspection of business records

In any action under section 44-1582, the court, pursuant to applicable rules of discovery, shall permit the plaintiff, the plaintiff's representative or, if appropriate, a judicially appointed designee to enter onto the defendant's business premises to inspect any information technology, records, files or other evidence that is relevant to the alleged use of stolen or misappropriated information technology in violation of section 44‑1582.  Any discovery taken pursuant to this section is in addition to and does not limit any other discovery permitted under applicable rules, including rules providing for entry onto land or other property for inspection and other purposes. END_STATUTE

START_STATUTE44-1584.  Defenses

In any action under section 44-1582, a defendant is not liable if the defendant proves by a preponderance of the evidence that the aggregate retail value of the stolen or misappropriated information technology at the time of the alleged violation is less than ten thousand dollars.  For the purposes of this section, "retail value" means the retail price of the information technology in this state, multiplied by the number of stolen or misappropriated items used in the business operations of the person who is alleged to have violated section 44-1582. END_STATUTE

Sec. 2.  Severability

If a provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act that can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.