A BILL TO BE ENTITLED
AN ACT to make manufacture of any article or product while using stolen or misappropriated information technology an unfair act.
Whereas, manufacturers are a vital source of jobs and economic growth in the State of North Carolina; and
Whereas, law‑abiding manufacturers in this State suffer lost sales, market share, and jobs when they are forced to compete against companies that use stolen or misappropriated information technology to reduce production costs and gain a competitive edge; and
Whereas, the theft of American information technology is particularly rampant in foreign markets, reaching as high as 90% in some countries; and
Whereas, IT theft costs the U.S. economy thousands of jobs and billions of dollars in economic growth; and
Whereas, the use of stolen or misappropriated information technology unfairly lowers manufacturers' costs of production by tens if not hundreds of thousands of dollars; and
Whereas, manufacturers that knowingly use significant amounts of stolen or misappropriated information technology to reduce their costs should not be allowed to benefit from their illegal acts; and
Whereas, existing laws relating to unfair trade practices do not adequately address the harms that occur when manufacturers use stolen or misappropriated information technology to gain an unfair competitive advantage over companies that play by the rules; and
Whereas, it is the purpose of this act to enable effective recourse against manufacturers that obtain an unlawful competitive advantage by using stolen or misappropriated information technology to make goods; and
Whereas, to accomplish this purpose, law‑abiding manufacturers who have suffered economic harm from a directly competing manufacturer's sale of products made using stolen or misappropriated information technology will be allowed to pursue a cause of action against the company that used the stolen or misappropriated information technology; and
Whereas, the remedies available to the law‑abiding manufacturer in such cases are limited to ensure that the relief obtained is proportional to the harm; and
Whereas, to safeguard against the possibility of frivolous litigation or other negative consequences, this act also provides carefully circumscribed procedures and exemptions designed to protect businesses that make good‑faith efforts to act in accordance with their legal responsibilities; and
Whereas, in particular, no action may be brought unless the manufacturer that allegedly used the stolen or misappropriated technology is provided with notice about the allegation and given an opportunity to either cure the violation or establish that it is not using stolen or misappropriated information technology; and
Whereas, actions may be brought only against businesses that themselves manufacture, produce, or assemble articles or products while using stolen or misappropriated information technology, not against other companies that merely contract with such businesses for the manufacture of articles or products; and
Whereas, to protect the interests of all businesses, the act includes affirmative defenses and other safeguards to make sure that downstream purchasers and others will not be unfairly burdened; and
Whereas, it is the intent of the General Assembly that this act shall be construed in ways that appropriately remedy the competitive harm that occurs when articles or products manufactured using stolen or misappropriated information technology are sold or offered for sale in this State; Now, therefore,
The General Assembly of North Carolina enacts:
SECTION 1.  Chapter 75 of the General Statutes is amended by adding a new Article to read:
"Article 1A.
"Manufacture and Sale of Products Using Stolen or Misappropriated Information Technology.
"§ 75‑48.  Definitions.
The following definitions apply in this Article:
(1)	Article or product. – Any tangible article or product. The term does not include (i) any services sold, offered for sale, or made available in this State, including free services and online services; (ii) any product subject to regulation by the United States Food and Drug Administration and that is primarily used for medical or medicinal purposes; (iii) food and beverages; or (iv) restaurant services.
(2)	Copyrightable end product. – A work within the subject matter of copyright as specified in Section 102 of Title 17 of the United States Code, and which for the purposes of this Article includes mask works protection as specified in Section 902 of Title 17 of the United States Code.
(3)	Essential component. – A component of an article or product provided or to be provided to a third party pursuant to a contract, including a purchase order, without which such article or product will not perform as intended and for which there is no substitute component available that offers a comparable range and quality of functionalities and is available in comparable quantities and at a comparable price.
(4)	Manufacture. – To directly manufacture, produce, or assemble an article or product, in whole or substantial part. The term 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.
(5)	Material competitive injury. – At least a three percent (3%) retail price difference between the article or product made in violation of G.S. 75‑48.1(a) 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. 
(6)	Retail price. – The retail price of stolen or misappropriated information technology charged at the time, 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 G.S. 75‑48.1(a).
(7)	Stolen or misappropriated information technology. – Hardware or software that a person acquired, appropriated, or used without the authorization of the owner of the information technology or the owner's authorized licensee in violation of applicable law. However, the term 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 that person. For purposes of this definition, information technology is used in a person's business operations if the person uses such technology in the manufacture, distribution, marketing, or sales of the articles or products subject to G.S. 75‑48.1(a).
"§ 75‑48.1.  Manufacturing while using stolen or misappropriated information technology an unfair act; relation to other laws.
(a)	Unfair Act. – 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 G.S. 75‑48.2 and, with respect to remedies sought under G.S. 75‑48.3(f) or G.S. 75‑48.5, 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 sold or offered for sale in this State that was manufactured without violating this subsection. Any person who engages in such unfair act, and any articles or products manufactured by such person in violation of this subsection, shall be subject to the liabilities and remedial provisions of this Article in an action by the Attorney General or any injured person described in G.S. 75‑48.3(e), except as provided in subsection (b) of this section and G.S. 75‑48.2, 75‑48.3, 75‑48.4, 75‑48.5, and 75‑48.6.
(b)	Exceptions. – No action may be brought under this Article, and no liability shall result, if any of the following are true:
(1)	The end article or end product sold or offered for sale in this State and alleged to violate subsection (a) of this section is any of the following: 
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 sub-subdivision 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. 
c.	Packaging, carrier media, or promotional or advertising materials for any end article, end product, or merchandise that falls within sub-subdivision a. or b. of this subdivision.
(2)	The allegation that a particular technology constitutes stolen or misappropriated information technology is based on either of the following:
a.	A claim that the information technology or its use infringes a patent or misappropriates a trade secret under applicable law or that could be brought under any provision of Title 35 of the United States Code.
b.	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. 
(3)	The allegation is based on a claim that the person violated subsection (a) of this section by aiding, abetting, facilitating, or assisting someone else to acquire, appropriate, use, sell, or offer to sell, or by providing someone else with access to, information technology without authorization of the owner of such information technology or the owner's authorized licensee in violation of applicable law.
"§ 75‑48.2.  Notice and opportunity to cure required prior to filing of action. 
(a)	Notice and Opportunity to Cure Required. – No action may be brought under G.S. 75‑48.1(a) unless the person subject to G.S. 75‑48.1(a) 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 did one of the following:
(1)	Failed to establish that its use of the information technology in question did not violate G.S. 75‑48.1(a).
(2)	Failed, within 90 days after receiving such notice, to cease use of the owner's stolen or misappropriated information technology; provided, however, that if the person commences and thereafter proceeds diligently to replace such information technology with information technology whose use would not violate G.S. 75‑48.1(a), such period shall be extended for an additional period of 90 days, not to exceed 180 days total. 
(b)	Contents of Notice. – To satisfy the requirements of this section, a written notice must, under penalty of perjury, do all of the following:
(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 or the owner's authorized licensee in violation of the applicable law.
(4)	To the extent known, state the manner in which such information technology is being used by the defendant. 
(5)	State the articles or products to which such information technology relates. 
(6)	Specify the basis and the particular evidence upon which the notifier bases such allegation.
(c)	Certification Requirement. – The written notification shall state, under penalty of perjury, that, after a reasonable and good‑faith investigation, the information in the notice is accurate based on the notifier's reasonable knowledge, information, and belief.
(d)	The information technology owner or its agent may extend any period described in this section.
"§ 75‑48.3.  Filing of action; remedies; attorneys' fees; affirmative defense.
(a)	Filing of Action. – No earlier than 90 days after the provision of notice in accordance with G.S. 75‑48.2, the Attorney General in the name of the State, or any person described in subsection (e) of this section, may bring an action against any person who is subject to G.S. 75‑48.1(a).
(b)	Remedies. – In any suit instituted pursuant to subsection (a) of this section, in which the defendant is found by the court to have violated G.S. 75‑48.1(a), the court may do any or all of the following:
(1)	Enjoin violations of G.S. 75‑48.1(a), including by enjoining the defendant from selling or offering to sell in this State articles or products that are subject to G.S. 75‑48.1(a), except as provided in subsection (f) of this section; provided that no such injunction shall encompass articles or products to be provided to a third party that establishes that such third party has satisfied one or more of the affirmative defenses set forth in G.S. 75‑48.6(a) with respect to the manufacturer alleged to have violated G.S. 75‑48.1(a). 
(2)	Award actual direct or statutory damages to the plaintiff in an amount equal to the greater of the following:
a.	Actual direct damages, which may be imposed only against the person who G.S. 75‑48.1(a).
b.	Statutory damages of no more than the retail price of the stolen or misappropriated technology, which may be imposed only against the person who violated G.S. 75‑48.1(a).
(3)	Award enhanced damages to the plaintiff in an amount equal to up to treble the amount of damages authorized under subdivision (2) of this subsection where the court finds that the defendant's use of the stolen or misappropriated information technology was willful. Enhanced damages under this subdivision shall be imposed only against the person found to have violated G.S. 75‑48.1(a). 
(4)	In the event the person alleged to have violated G.S. 75‑48.1(a) has been subject to a final judgment or has entered into a final settlement, or any products manufactured by such person and alleged to violate G.S. 75‑48.1(a) have been the subject of an injunction or attachment order, in any federal or state court in this State or any other state, arising out of the same theft or misappropriation of information technology, the court shall dismiss the action with prejudice. If such person is a defendant in an ongoing action, or any products manufactured by such person and alleged to violate G.S. 75‑48.1(a) are the subject of an ongoing injunction or attachment order, in any federal or state court in this State or any other state, arising out of the same theft or misappropriation of information technology, the court shall stay the action against such person pending resolution of the other action. In the event the other action results in a final judgment or final settlement, the court shall dismiss the action with prejudice against the person. Dismissals under this section shall be res judicata to actions filed against the person alleged to have violated G.S. 75‑48.1(a) arising out of the same theft or misappropriation of information technology.
(c)	Damages Against a Third Party. – 
(1)	After determination by the court that a person has violated G.S. 75‑48.1(a) and entry of a judgment against the person for violating G.S. 75‑48.1(a), the Attorney General, or a person described in subsection (e) of this section, may add to the action a claim for actual direct damages against a third party who sells or offers to sell in this State products made by that person in violation of G.S. 75‑48.1(a), subject to the provisions of G.S. 75‑48.6; provided, however, that damages may be imposed against a third party only if all of the following are true: 
a.	The third party's agent for service of process properly was served with a written notice sent to the person alleged to have violated G.S. 75‑48.1(a) that satisfies the requirements of G.S. 75‑48.2 at least 90 days prior to the entry of the judgment. 
b.	The person who violated G.S. 75‑48.1(a) did not make an appearance or does not have sufficient attachable assets to satisfy a judgment against the person.
c.	Such person either manufactured the final product or produced a component equal to thirty percent (30%) or more of the value of the final product.
d.	Such person has a direct contractual relationship with the third party respecting the manufacture of such final product or component.
e.	The third party has not been subject to a final judgment or entered into a final settlement in any federal or state court in this State or any other state arising out of the same theft or misappropriation of information technology; provided, however, that in the event the third party is a party to an ongoing suit for damages, or has entered an appearance as an interested third party in proceedings in rem, in any federal or state court in this State or any other state arising out of the same theft or misappropriation of information technology, the court shall stay the action against the third party pending resolution of the other action. In the event the other action results in a final judgment, the court shall dismiss the action with prejudice against the third party and dismiss any in rem action as to any articles or products manufactured for such third party or that have been or are to be supplied to such third party. Dismissals under this section shall be res judicata to actions filed against the person alleged to have violated G.S. 75‑48.1(a) arising out of the same theft or misappropriation of information technology.
(2)	An award of damages against such third party pursuant to subdivision (c)(1) of this section shall be the lesser of the retail price of the stolen or misappropriated information technology at issue or two hundred fifty thousand dollars ($250,000.00), less any amounts recovered from the person adjudicated to have violated G.S. 75‑48.1(a), and subdivision (b)(3) of this section shall not apply to such award or recovery against such third party.
(d)	Attorneys' Fees. – In an action under this Article, the court may also do any or all of the following:
(1)	With respect to an award under subsection (b) of this section only, award costs and reasonable attorneys' fees to (i) a prevailing plaintiff in any action filed by an injured person under G.S. 75‑48.1(a) or (ii) a prevailing defendant in actions brought by an allegedly injured person.
(2)	With respect to an action under subsection (c) of this section brought by a private plaintiff only, award costs and reasonable attorneys' fees to a third party for all litigation expenses (including, without limitation, discovery expenses) incurred by that party if it prevails on the requirement set forth in sub-subdivision (c)(1)c. of this section or who qualifies for an affirmative defense under G.S. 75‑48.6; provided, however, in a case in which the third party received a copy of the notification described in sub-subdivision (c)(1)a. of this section at least 90 days before the filing of the action under subsection (c) of this section, that with respect to a third party's reliance on the affirmative defenses set forth in G.S. 75‑48.6(a)(3) and G.S. 75‑48.6(a)(4), the court may award costs and reasonable attorneys' fees only if all of the conduct on which the affirmative defense is based was undertaken by the third party, and the third party notified the plaintiff of such conduct, prior to the end of such 90‑day period.
(e)	Injured Persons Defined. – A person shall be deemed to have been injured by the sale or offer for sale of a directly competing article or product subject to G.S. 75‑48.1(a) if the person establishes by a preponderance of the evidence that all of the following are true:
(1)	The person manufactures articles or products that are sold or offered for sale in this State in direct competition with articles or products that are subject to G.S. 75‑48.1(a). 
(2)	The person's articles or products were not manufactured using stolen or misappropriated information technology of the owner of the information technology.
(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 ($20,000) or more.
(4)If the person is proceeding in rem or seeks injunctive relief, the person suffered material competitive injury as a result of the violation of G.S. 75‑48.1(a). 
(f)	Enforcement of Injunctive Relief. –
(1)	If the court determines that a person found to have violated G.S. 75‑48.1(a) 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 G.S. 75‑48.1(a), except as provided in G.S. 75‑48.4.
(2)	To the extent that an article or product subject to G.S. 75‑48.1(a) is an essential component of a third party's article or product, the court shall deny injunctive relief as to such essential component, provided that the third party has undertaken good‑faith efforts within the third party's rights under its applicable contract with such manufacturer to direct the manufacturer of the essential component to cease the theft or misappropriation of information technology in violation of G.S. 75‑48.1(a), 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.
(g)	The court shall determine whether a cure period longer than the period reflected in G.S. 75‑48.2 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 G.S. 75‑48.1(a). 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 G.S. 75‑48.1(a), or the defendant ceased use of the stolen or misappropriated information technology, then the action shall be dismissed.
"§ 75‑48.4.  Claims against third‑party articles or products.
No injunction may issue against a person other than the person adjudicated to have violated G.S. 75‑48.1(a), and no attachment order may issue against articles or products other than articles or products in which the person alleged to violate G.S. 75‑48.1(a) holds title. A person other than the person alleged to violate G.S. 75‑48.1(a) includes any person other than the actual manufacturer who contracts with or otherwise engages another person to develop, manufacture, produce, market, distribute, advertise, or assemble an article or product alleged to violate G.S. 75‑48.1(a).
"§ 75‑48.5.  In rem jurisdiction.
(a)	In a case in which the court is unable to obtain personal jurisdiction over a person subject to G.S. 75‑48.1(a), the court may proceed in rem against any articles or products subject to G.S. 75‑48.1(a) sold or offered for sale in this State in which the person alleged to have violated G.S. 75‑48.1(a) holds title. Except as provided in G.S. 75‑48.4 and subsections (b) through (d) of this section, 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. 
(b)	At least 90 days prior to the enforcement of an attachment order against articles or products pursuant to subsection (a) of this section, the court shall notify any person in possession of such articles or products of the pending attachment order. Prior to the expiration of such 90‑day period, any person for whom the articles or products were manufactured, or to whom such articles or products have been or are to be supplied, pursuant to an existing contract or purchase order, may do either of the following:
(1)	Establish that the person has satisfied one or more of the affirmative defenses set forth in G.S. 75‑48.6(a) with respect to the manufacturer alleged to have violated G.S. 75‑48.1(a), in which case the attachment order shall be dissolved only with respect to those articles or products that were manufactured for such person, or have been or are to be supplied to such person, pursuant to an existing contract or purchase order.
(2)	Post a bond with the court equal to the retail price of the allegedly stolen or misappropriated information technology or twenty-five thousand dollars ($25,000), whichever is less, in which case the court shall stay enforcement of the attachment order against such articles or products and shall proceed on the basis of its jurisdiction over the bond. The person posting the bond shall recover the full amount of such bond, plus interest, after the issuance of a final judgment.
(c)	In the event the person posting the bond pursuant to subdivision (b)(2) of this section is entitled to claim an affirmative defense in G.S. 75‑48.6, and that person establishes with the court that it is entitled to any such affirmative defense, the court shall award costs and reasonable attorneys' fees to the person posting the bond and against the plaintiff in the event the plaintiff proceeds with an action pursuant to G.S. 75‑48.3(c) against the person posting the bond.
(d)	In the event that the court does not provide notification as described in subsection (b) of this section, the court, upon motion of any third party, shall stay the enforcement of the attachment order for 90 days as to articles or products manufactured for such third party, or that have been or are to be supplied to such third party, pursuant to an existing contract or purchase order, during which 90‑day period the third party may avail itself of the options set forth in subdivision (b)(1) and (b)(2) of this section.
"§ 75‑48.6.  Affirmative defenses for third parties.
(a)	A court may not award damages against a third party pursuant to G.S. 75‑48.3(c) where that party, after having been afforded reasonable notice of at least 90 days by proper service upon such party's agent for service of process and opportunity to plead any of the affirmative defenses set forth below, establishes by a preponderance of the evidence that any of the following are true:
(1)	The third party is the end consumer or end user of an article or product that is subject to G.S. 75‑48.1(a), or acquired the article or product after its sale to an end consumer or end user.
(2)	The person is a business with annual revenues that do not exceed fifty million dollars ($50,000,000).
(3)	The person acquired the articles or products:
a.	And had either (i) a code of conduct or other written document  governing the person's commercial relationships with the manufacturer adjudicated to have violated G.S. 75‑48.1(a) and which includes commitments, such as general 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, however, with respect to both (i) and (ii) of this sub-subdivision, that within 180 days of receiving written notice of the judgment against the manufacturer for violation of G.S. 75‑48.1(a) and a copy of a written notice that satisfies the requirements of G.S. 75‑48.2, the person undertakes commercially reasonable efforts to do any of the following: 
1.	Exchange written correspondence confirming that such manufacturer is not using such stolen or misappropriated information technology in violation of G.S. 75‑48.1(a), 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; 
2.	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; and for purposes of clarification, the third party need take no additional action to fully avail itself of this affirmative defense; or 
3.	In a case in which the manufacturer has failed to cease such theft or misappropriation within such 180‑day period, and the third party has not fulfilled either sub-sub-subdivision 1. or 2. of this sub-subdivision, cease the future acquisition of such articles or products from the  manufacturer during the period that such manufacturer continues to engage in such theft or misappropriation subject to G.S. 75‑48.1(a) 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 180 days after the effective date of this Article.
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 180 days after the effective date of this Article. Provided, however, that within 180 days of receiving written notice of the judgment against the manufacturer for violation of G.S. 75‑48.1(a) and a copy of a written notice that satisfies the requirements of G.S. 75‑48.2, the person undertakes commercially reasonable efforts to do any of the following: 
1.	Obtain from such manufacturer written assurances that such manufacturer is not using such stolen or misappropriated information technology in violation of G.S. 75‑48.1(a), 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. 
2.	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; and for purposes of clarification, the third party need take no additional action to fully avail itself of this affirmative defense.
3.	In a case in which the manufacturer has failed to cease such theft or misappropriation within such 180‑day period, and the third party has not fulfilled either sub-sub-subdivision 1. or 2. of this sub-subdivision, 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 G.S. 75‑48.1(a) where doing so would not constitute a breach of such agreement.
(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 G.S. 75‑48.1(a). A person may satisfy this subdivision by doing any of the following: 
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 intellectual property, and further provides that a failure to remedy any deficiencies found in such audit that constitute a violation of the 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.
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.
(5)	The person does not have a contractual relationship with the person alleged to have violated G.S. 75‑48.1(a) respecting the manufacture of the articles or products alleged to have been manufactured in violation of G.S. 75‑48.1(a).
(b)	A third party shall have the opportunity to be heard regarding whether an article or product is an essential component provided or to be provided to such third party and shall have the right to file a motion to dismiss any action brought against it under G.S. 75‑48.3(c).
(c)	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, and prior to such ruling may allow discovery, in an action under G.S. 75‑48.3(c), only on the particular defenses raised by the third party. 
(d)	The court shall allow discovery against a third party on an issue only after all discovery on that issue between the parties has been completed and only if the evidence produced as a result of such discovery does not resolve an issue of material dispute between the parties.
(e)	Any confidential or otherwise sensitive information submitted by a party pursuant to this section shall be subject to a protective order.
"§ 75‑48.7.  Other laws not applicable.
G.S. 75‑1 to G.S. 75‑16.2 do not apply to this Article. The remedies provided under this Article are the exclusive remedies for the parties.
"§ 75‑48.8.  Severability.
If any subsection, clause, sentence, paragraph, or part of this Article shall be adjudged by any court of competent jurisdiction to be invalid, that judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, section, or part thereof directly involved in the controversy in which the judgment shall have been rendered."
SECTION 2.  This act becomes effective 90 days after it becomes law, except that no award of damages against a third party pursuant to G.S. 75‑48.3(c), as enacted by this act, shall be enforced until 18 months have elapsed from the date this act becomes law.