Russia mulls making software piracy legal and patent licensing compulsory

Rule rethink would apply only to those in countries that support sanctions

Russia is considering handing out licenses to use foreign software, database, and chip design patents, and legalizing software copyright violations, in response to sanctions imposed over its invasion of Ukraine.

According to Russian business publication Kommersant, a government document drafted on March 2 outlines possible actions to support the Russian economy, which faces extensive trade restrictions from the US, the UK, and Europe, and business withdrawals.

With companies like Apple, Oracle, Microsoft, and SAP halting sales (though not ending service to existing customers), Russia has instituted tax breaks for technology firms and conscription deferments for IT workers to retain its core resources and talent during the conflict.

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

Companies inside Russia and external firms from countries that haven't ventured an opinion on the invasion and shelling of civilians should see continued legal protection, whatever that's worth, for their intellectual property.

The compulsory license would be allowed under Article 1360 of the Civil Code of the Russian Federation. As algorithmically translated, it reads:

The Government of the Russian Federation has the right, in case of emergency, related to ensuring the defense and security of the state, protecting the life and health of citizens, to decide on the use of an invention, utility model or industrial design without the consent of the patent owner, notifying him of this as soon as possible and with paying him adequate compensation.

Our reading of this is that the Kremlin wants to grant organizations licenses to use patented technology, without the permission of the patent holders, with some kind of payment offered.

Back to the bad old days

History doesn't repeat itself but it rhymes. It used to be that practically all software in Russia was pirated or used without a license. It may yet be again and may not matter as much. Though the Russian Federation adopted 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 were widely ignored in the country during the 1990s.

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

By 2004, Russia had managed to reduce the rate of pirated software to a mere 87 per cent, according to the Business Software alliance(BSA) [PDF].

Improvements in intellectual property protection proved slow. In a blog post discussing the Kommersant report, software-licensing attorney Kyle Mitchell recounted his time in Moscow, Russia from 2008 to 2009, when copyright rules were widely ignored.

"With Larry Lessig making the rounds for Creative Commons, and a thousand voices proclaiming the 'freedom' of anything we could rip and share online, Russia was a kind of copyright-free demilitarized zone," he wrote. "Only at the heavy ends of the economy, or in the organs of the state, did the laws on the books, or the looming consequences of potential WTO accession, really come to bear."

By 2010, the software piracy rate in Russia had fallen to 65 per cent, per the BSA [PDF]. However, copyright enforcement in Russia sometimes served purposes other than international trade norms, like suppressing political opposition.

That 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 organizations engaged in public advocacy wasn't exactly what it had in mind as it pushed to protect its commercial interests. In the US that same year, Public Knowledge published a report [PDF] on meritless copyright claims being used to suppress political speech.

In 2013 and 2015, Russia adopted more copyright rules. And by 2017, according to the BSA [PDF], the rate of unlicensed PC software installation reached 62 percent in Russia – about what it was a decade earlier.

DRM has moved on

Yet even if Russia goes ahead with these latest proposals, the future of software piracy could fall short of the past. With cloud computing, IT companies have found a better business model that, coincidentally, keeps intellectual assets locked away in data centers.

In an email to The Register, Mitchell said he was reluctant to try to assess the impact of the Russian proposals.

"Even if implemented in the strongest proposed form, this could very well be totally swallowed by events, including official sanctions and the voluntary boycotts of private vendors, payment networks, and so on," he said.

"It's easy to read the proposal primarily as a somewhat limp-wristed response, a low-priority mitigation. Companies are walking away from the table. Their Russian customers are left with the chips and cards they have in hand."

Mitchell expressed skepticism at the suggestion that piracy reduction should be counted as a main driver of cloud adoption.

We could see the loss of functioning customer-vendor relationships for software having politically meaningful effects in two ways: widespread disruption of basic business administration and derailing of more specialized, tech-dependent projects

"That's in play, but causation isn't clear: how much and how often as a factor, rather than a knock-on effect?" he said. "'Cloud' is a complex phenomenon, and quite contextual. There are niches in the United States where installed-program license keys remain the norm. At the same time, there's been a long, ongoing, rather public business and policy conversation in Russia about self-sufficiency, security, and foreign dependence."

"We could see the loss of functioning customer-vendor relationships for software having politically meaningful effects in two ways: widespread disruption of basic business administration and derailing of more specialized, tech-dependent projects. I've seen reference to market research showing cloud service growth in Russia, as elsewhere. But I've also seen reports suggesting Russian business isn't as far along in its shift as, say, the USA," he suggested.

If Russia should return to egregious intellectual property violations, Mitchell said that Western firms have historically been able to seek redress from Russian firms via arbitration, often in Stockholm or London.

"Widespread international agreements honor both commitments to arbitrate and the judgments of arbitrators," he said. "Western firms certainly have gone after Russian firms before foreign arbitrators, and then gone after Russian property abroad, where they could find it." ®

Other stories you might like

  • Lonestar plans to put datacenters in the Moon's lava tubes
    How? Founder tells The Register 'Robots… lots of robots'

    Imagine a future where racks of computer servers hum quietly in darkness below the surface of the Moon.

    Here is where some of the most important data is stored, to be left untouched for as long as can be. The idea sounds like something from science-fiction, but one startup that recently emerged from stealth is trying to turn it into a reality. Lonestar Data Holdings has a unique mission unlike any other cloud provider: to build datacenters on the Moon backing up the world's data.

    "It's inconceivable to me that we are keeping our most precious assets, our knowledge and our data, on Earth, where we're setting off bombs and burning things," Christopher Stott, founder and CEO of Lonestar, told The Register. "We need to put our assets in place off our planet, where we can keep it safe."

    Continue reading
  • Conti: Russian-backed rulers of Costa Rican hacktocracy?
    Also, Chinese IT admin jailed for deleting database, and the NSA promises no more backdoors

    In brief The notorious Russian-aligned Conti ransomware gang has upped the ante in its attack against Costa Rica, threatening to overthrow the government if it doesn't pay a $20 million ransom. 

    Costa Rican president Rodrigo Chaves said that the country is effectively at war with the gang, who in April infiltrated the government's computer systems, gaining a foothold in 27 agencies at various government levels. The US State Department has offered a $15 million reward leading to the capture of Conti's leaders, who it said have made more than $150 million from 1,000+ victims.

    Conti claimed this week that it has insiders in the Costa Rican government, the AP reported, warning that "We are determined to overthrow the government by means of a cyber attack, we have already shown you all the strength and power, you have introduced an emergency." 

    Continue reading
  • China-linked Twisted Panda caught spying on Russian defense R&D
    Because Beijing isn't above covert ops to accomplish its five-year goals

    Chinese cyberspies targeted two Russian defense institutes and possibly another research facility in Belarus, according to Check Point Research.

    The new campaign, dubbed Twisted Panda, is part of a larger, state-sponsored espionage operation that has been ongoing for several months, if not nearly a year, according to the security shop.

    In a technical analysis, the researchers detail the various malicious stages and payloads of the campaign that used sanctions-related phishing emails to attack Russian entities, which are part of the state-owned defense conglomerate Rostec Corporation.

    Continue reading
  • FTC signals crackdown on ed-tech harvesting kid's data
    Trade watchdog, and President, reminds that COPPA can ban ya

    The US Federal Trade Commission on Thursday said it intends to take action against educational technology companies that unlawfully collect data from children using online educational services.

    In a policy statement, the agency said, "Children should not have to needlessly hand over their data and forfeit their privacy in order to do their schoolwork or participate in remote learning, especially given the wide and increasing adoption of ed tech tools."

    The agency says it will scrutinize educational service providers to ensure that they are meeting their legal obligations under COPPA, the Children's Online Privacy Protection Act.

    Continue reading
  • Mysterious firm seeks to buy majority stake in Arm China
    Chinese joint venture's ousted CEO tries to hang on - who will get control?

    The saga surrounding Arm's joint venture in China just took another intriguing turn: a mysterious firm named Lotcap Group claims it has signed a letter of intent to buy a 51 percent stake in Arm China from existing investors in the country.

    In a Chinese-language press release posted Wednesday, Lotcap said it has formed a subsidiary, Lotcap Fund, to buy a majority stake in the joint venture. However, reporting by one newspaper suggested that the investment firm still needs the approval of one significant investor to gain 51 percent control of Arm China.

    The development comes a couple of weeks after Arm China said that its former CEO, Allen Wu, was refusing once again to step down from his position, despite the company's board voting in late April to replace Wu with two co-chief executives. SoftBank Group, which owns 49 percent of the Chinese venture, has been trying to unentangle Arm China from Wu as the Japanese tech investment giant plans for an initial public offering of the British parent company.

    Continue reading
  • SmartNICs power the cloud, are enterprise datacenters next?
    High pricing, lack of software make smartNICs a tough sell, despite offload potential

    SmartNICs have the potential to accelerate enterprise workloads, but don't expect to see them bring hyperscale-class efficiency to most datacenters anytime soon, ZK Research's Zeus Kerravala told The Register.

    SmartNICs are widely deployed in cloud and hyperscale datacenters as a means to offload input/output (I/O) intensive network, security, and storage operations from the CPU, freeing it up to run revenue generating tenant workloads. Some more advanced chips even offload the hypervisor to further separate the infrastructure management layer from the rest of the server.

    Despite relative success in the cloud and a flurry of innovation from the still-limited vendor SmartNIC ecosystem, including Mellanox (Nvidia), Intel, Marvell, and Xilinx (AMD), Kerravala argues that the use cases for enterprise datacenters are unlikely to resemble those of the major hyperscalers, at least in the near term.

    Continue reading

Biting the hand that feeds IT © 1998–2022