Chinese company accused of software theft in US

The state of Oklahoma has filed a lawsuit against a Chinese supplier of valves to the oil industry, accusing it of using pirated software to gain an unfair advantage over its competitors.

The complaint, filed at the US District Court of Oklahoma County, claims Chinese manufacturer Neway Valve Company used the same software as several Oklahoma-based companies but did not buy enough licenses.

It was filed by the Oklahoma office of the attorney general, a legal advisor to the government, on March 13.

The complaint says Oklahoma valve makers, including Kimray, Cameron, Balon Corporation and CIRCOR, which have several thousand employees, have all been affected.

According to the complaint, valve makers rely on licensed software to design, manufacture and service valves used in the oil and gas industry.

The complaint said that, according to an investigation by Rouse and Company in Hong Kong, Neway employees had more than 1,300 computers but had only bought 380 software licences.

Each computer should have a license and Neway had avoided more than $280,000 in licensing fees, the complaint added.

The “defendants have illegitimately and unlawfully reduced their production costs by illegally obtaining copyrighted software that is crucial to the production and sale of their products,” the complaint said.

“Instead of engaging in legitimate competition, [the] defendants have illegally utilised unlicensed software.”

Attorney general Scott Pruitt said: “The use of stolen software and other IP by unscrupulous companies is unfair, unlawful and gives them an advantage over those companies who follow the law.”

Pruitt added that the lawsuit “sends a message” that Oklahoma will not tolerate companies, both foreign and domestic, that seek to gain an unfair advantage through piracy.

Tom Hill, chief executive officer and chairman of the board at Kimray said it was “proud” of its heritage as a lawful company focused on quality products and good character.

“Piracy provides an unfair advantage and creates unlawful gain. In the long-term, it damages all parties involved,” Hill added.

The attorney general’s office is seeking to bar Neway from operating in Oklahoma until it proves it is complying with the law and is also demanding damages.

Neway, which was founded in 1996, is China’s largest industrial valve manufacturer.

According to the complaint, it has seven facilities in China and sales to US customers generate around 34.4 percent of its overall revenue.

The company has been contacted for comment.