Russia considers making software piracy legal • The Register

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Russia is considering licensing foreign software, database and chip design patents and legalizing software copyright infringement in response to sanctions imposed over its invasion of Ukraine.

According to Russian business daily Kommersant, a government document drafted on March 2 outlines possible measures to support Russia’s economy, which is facing sweeping trade restrictions from the US, UK and Europe and company pullouts.

With companies like Apple, Oracle, Microsoft and SAP ceasing sales (although not ceasing service to existing customers), Russia has introduced tax breaks for tech companies and deferrals for IT workers to conserve its key resources and talent during the conflict.

The March 2 document, Kommersant says, proposes a compulsory license for patented software, databases and chip designs, and considers removing criminal and administrative liability for software license violations, but only for rightholders from countries that support sanctions against Russia.

Companies inside Russia and outside companies from countries that haven’t dared to express an opinion about the invasion and shelling of civilians should continue to see legal protection for their intellectual property, whatever that’s worth.

The compulsory license would be permissible under Article 1360 of the Civil Code of the Russian Federation. Algorithmically translated it reads:

We read that the Kremlin wants to grant organizations licenses to use patented technology without the permission of the patent holders, offering some form of payment.

Back to the bad old days

History doesn’t repeat itself, but it rhymes. Previously, virtually all software in Russia was pirated or used without a license. It can be again and maybe not matter that much. Although the Russian Federation adopted the copyright commitments made by the Soviet Union before its dissolution in 1991, subsequently enacted its own copyright rules in 1993, and joined the Berne Convention in 1995, software copyrights in the country were largely ignored in the 1990s.

According to a 2000 article by Duke University School of Law, The Moscow Times put the software piracy rate in 1996 at 91 percent.

According to the Business Software Alliance (BSA), by 2004 Russia had managed to reduce the rate of piracy to just 87 percent. [PDF].

Improvements in intellectual property protection have been slow. In a blog post about the Kommersant report, software licensing attorney Kyle Mitchell recounted his time in Moscow, Russia in 2008-2009 when copyright rules were largely ignored.

“With Larry Lessig doing the rounds for Creative Commons and a thousand voices proclaiming ‘freedom’ of anything we could rip and share online, Russia was sort of a copyright-free demilitarized zone,” he wrote. “It was only at the hard ends of the economy or in the state organs that the laws on the books or the threatening consequences of possible WTO accession really had an impact.”

By 2010, the software piracy rate in Russia had dropped to 65 percent, according to the BSA [PDF]. However, copyright enforcement in Russia sometimes served purposes other than international trade norms, such as suppressing political opposition.

Earlier this year, in response to a New York Times exposé, Microsoft wrote a blog post lamenting that Russia’s use of software piracy charges to harass publicly engaged organizations wasn’t exactly what it had in mind had when it pushed to protect its commercial interests. In the US, Public Knowledge published a report that same year [PDF] about unsubstantiated copyright claims being used to suppress political speech.

In 2013 and 2015, Russia passed further copyright rules. And by 2017, according to the BSA [PDF]The rate of unlicensed PC software installations in Russia reached 62 percent – roughly the same as a decade earlier.

DRM has evolved

But even if Russia goes ahead with these latest proposals, the future of software piracy could lag behind the past. With cloud computing, IT companies have found a better business model that happens to include intellectual property in data centers.

In an email to The registryMitchell said he was reluctant to assess the impact of the Russian proposals.

“Even if this is implemented in the strongest proposed form, this could very well be swallowed up entirely by events including official sanctions and the voluntary boycott of private providers, payment networks, etc.,” he said.

“It’s easy to read the proposal primarily as a somewhat moronic response, as a low-priority mitigation. Businesses walk away from the table. Their Russian customers are left with the chips and cards in their hands.”

Mitchell expressed skepticism about the suggestion that reducing piracy should be seen as a key driver for cloud adoption.

We could see that the loss of viable customer-supplier relationships for software has politically significant implications in two ways: widespread disruption of basic business administration and derailment of specialized, technology-dependent projects

“That matters, but the causality isn’t clear: how much and how often as a factor rather than a consequential effect?” he said. “’Cloud’ is a complex phenomenon and quite context dependent. There are niches in the United States where license keys for installed programs remain the norm over self-sufficiency, security, and foreign dependency.”

“We could see that the loss of viable software customer-supplier relationships has politically significant implications in two ways: widespread disruption of basic business administration and derailment of more specialized, technology-dependent projects. I’ve seen evidence from market research that cloud services are showing growth in Russia, as elsewhere. But I’ve also seen reports that suggest the Russian business isn’t as far along in relocating as, say, the US,” he suggested.

Should Russia return to egregious intellectual property violations, Mitchell said Western firms have in the past been able to seek redress from Russian firms through arbitration, often in Stockholm or London.

“Widespread international agreements respect both arbitration obligations and the judgments of arbitrators,” he said. “Western firms certainly pursued Russian firms in front of foreign arbitrators and then sought Russian property abroad where they could find it.” ®

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