State-level enforcement in the United States is turning software licensing compliance into a global supply chain issue. Under laws like the Unfair Competition Act, U.S. states including Massachusetts, Washington, and Louisiana can penalize companies—foreign or domestic—whose goods are manufactured using pirated or unlicensed software.

The laws allow state attorneys general or competitors to bring civil action. Sanctions can include export bans, civil penalties, or injunctions preventing the sale of goods in the state.

This creates a critical risk: even if your company is fully compliant, your supplier’s software piracy could expose you to litigation and lost market access.

Real-World Enforcement

In one of the earliest cases, Narong Seafood—a Thai exporter—was prosecuted under Massachusetts law in 2012 for using unlicensed Microsoft software to produce goods sold in the U.S. The case was settled with penalties and a licensing agreement (Microsoft News, 2012).

Since then, similar enforcement efforts have expanded:

  • In 2013, APM Terminals in the Netherlands faced scrutiny for sourcing components from a vendor flagged for illegal software use. (BSA | The Software Alliance)
  • In 2017, two Indian manufacturers were investigated in Washington state for supplying construction materials produced using pirated design software.
  • In 2021, U.S.-based importers were advised to audit their Asian suppliers’ licensing compliance after targeted enforcement activity in Louisiana.

These cases reflect a growing trend: software misuse is no longer treated as just IP theft—it’s a form of unfair trade.

Legal Basis

The U.S. Unfair Competition Act (as enacted in Massachusetts, Washington, and Louisiana) allows civil suits when:

  • A company gains a cost advantage by using unlicensed software
  • The infringing software is used to manufacture, distribute, or market goods entering the state

What matters is not where the infringement occurred—but whether the goods reach the state’s commercial market.

What Companies Must Do

To reduce risk, companies should:

  • Require software compliance declarations from all suppliers
  • Conduct regular IT audits across the supply chain
  • Include licensing warranties and third-party audit rights in vendor contracts

Trade compliance now includes IT compliance. Businesses that overlook software licensing deep in their supply chain face serious consequences at the border.

ITCA Can Help

ITCA assists exporters, importers, and supply chain managers by:

  • Mapping software use across vendor ecosystems
  • Identifying non-compliant operations before regulators or competitors do
  • Preparing documentation to prove due diligence under U.S. and international law

Contact us to assess your exposure and build a software-safe supply chain.