Russia is not a huge market but the possibility of Russians then re-selling in other countries could be a problem. US and European tech companies will need, as a prudent measure, to reinforce their existing protections. But the more challenging diplomatic and business question may be what happens if Chinese tech companies doing business with Russia in defiance of sanctions are then, themselves, sanctioned. JL
Tim De Chant reports in ars technica, image TechStony:
Russian law already allows for the government to authorize—“without consent of the patent holder”—the use of any intellectual property “in case of emergency related to ensuring the defense and security of the state.” The government hasn’t taken that step yet, but may soon. The plan would create “a compulsory licensing mechanism for software, databases, and technology for integrated microcircuits." It would only apply to companies from countries that have imposed sanctions. 91% of Russians prefer pirated content, with 75% saying the official versions cost too much money.With sanctions against Russia starting to bite, the Kremlin is mulling ways to keep businesses and the government running. The latest is a creative twist on state asset seizures, only instead of the government taking over an oil refinery, for example, Russia is considering legalizing software piracy.
Russian law already allows for the government to authorize—“without consent of the patent holder”—the use of any intellectual property “in case of emergency related to ensuring the defense and security of the state.” The government hasn’t taken that step yet, but it may soon, according to a report from Russian business newspaper Kommersant, spotted and translated by Kyle Mitchell, an attorney who specializes in technology law. It's yet another sign of a Cyber Curtain that's increasingly separating Russia from the West.
The plan would create “a compulsory licensing mechanism for software, databases, and technology for integrated microcircuits,” the Kommersant said. It would only apply to companies from countries that have imposed sanctions. While the article doesn’t name names, many large Western firms—some of which would be likely targets—have drastically scaled back business in Russia. So far, Microsoft has suspended sales of new products and services in Russia, Apple has stopped selling devices, and Samsung has stopped selling both devices and chips.Presumably, any move by the Kremlin to “seize” IP would exempt Chinese companies, which are reportedly considering how to press their advantage. Smartphone-makers Xiaomi and Honor stand to gain, as do Chinese automakers. Still, any gains aren’t guaranteed since doing business in Russia has become riddled with problems, spanning everything from logistics to finance.
Plus, although China has been ramping up its criticism of US policies, the Communist Party is likely hesitant to undermine its lucrative stake in global trade. “Chinese companies have much more to lose than to gain by violating sanctions,” analysts at Gavekal Dragonomics said in a research report cited by The Wall Street Journal. “For most Chinese companies, Russia is just too small of a market for the business to be worth the risk of getting cut off from developed markets or being sanctioned itself.”
Software piracy in Russia is nothing new, of course. A 2019 survey by ESET, a Slovakian security company, found that 91 percent of Russians preferred pirated content, with nearly 20 percent saying that they had installed cracked software. The most commonly cited reason—listed by 75 percent of respondents—was that the official versions cost too much money. The practice has been institutionalized before, too; Mitchell mentions that just a decade ago, Russian ISPs hosted their own file-sharing networks.
The country has a long history of disregarding intellectual property rights, particularly those from other countries. “The most significant example is Winnie-the-Pooh,” wrote Igor Slabykh for the Institute of Modern Russia, a US-based think tank. “When the Soviet Union created the Winnie-the-Pooh cartoon in 1969, it did so without any copyright holder’s permission, even though the Civil Code of the Russian Soviet Federal Socialist Republic prohibited such an act.”Such decisions, including the one that the Kremlin is currently weighing, are more frequently pragmatic than dogmatic. “As in the early United States, where printers freely copied English books,” Mitchell said in his blog post, “Russian society had come to the decision, collectively and non-explicitly, that for the moment, there was far more to gain taking en masse than to be lost in studious commerciality for domestic production.”
Still, state-sponsored software piracy may be a heavier lift today than it was even a decade ago. Software-as-a-service has become far more widespread, and many services are available only through a web app. It’s still possible to crack many traditional apps that rely on authentication servers to check subscription status, but it’s a lot harder than if Roskomnadzor could simply distribute a list of stolen or generated serial numbers
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