Problems and consequences of the law banning the sale of smartphones without Russian software: lawyer’s comment

The comment was prepared by the managing partner of the firm Roman Lukyanov.

Roman Lukyanov
On the one hand, the bill is aimed at amending the law on “Consumer Protection”, however, it follows from the explanatory note to the bill that in reality it pursues two goals:

• provide additional “protection” to Russian consumers when buying technically complex goods;
• ensure the protection of Russian Internet companies.

This is an important point, because the protection of “Russian Internet companies” is not a subject of regulation of the Law “On Consumer Protection”. Meanwhile, it seems that this interest is the basis of the bill. This is evidenced in particular by the Government’s response, which states the following: “the need for legal regulation provided for in the draft law has not been noted so far, the question of the need to pre-install Russian programs in order to protect consumer rights has not been raised.”

In other words, there is no objective evidence that the Russian consumer somehow suffers from the absence of “Russian programs” pre-installed on devices in certain cases. From this it can also be concluded that the bill is primarily focused not on the interests of consumers, but on some other – commercial or public – interests.

It is also not very clear from the bill what the “Russian program” is. Is this a program that was developed in the Russian Federation? Or is the program in Russian?

The fact is that many successful “Russian” software products are not formally Russian: ownership of a developer company is often structured in such a way that the business is registered outside the Russian Federation. Yandex and Mail.ru Group, for example, although they have Russian legal entities, but ultimately their founders are non-resident companies.

It is impossible to understand from the law how the criterion of belonging of a particular program to Russia should be determined – and this is a big problem. It may happen that there are simply no decent (and at least to some extent necessary for the consumer) programs with the purest Russian roots.

There is another problem. Formally, technically complex goods (taking into account the current list of complex goods approved by the Government of the Russian Federation) can include: system units, stationary and portable computers, including laptops, personal electronic computers (including tablets and smartphones), monitors with a digital control unit, satellite TV sets, gaming set-top boxes with digital control unit, televisions, projectors with digital control unit.

For each of these products, the Government can set a mandatory preset of “Russian programs”. Moreover, the bill proposes to regulate not only the lists of goods and programs, but also the “order of pre-installation” of such programs on the device.

It is also unclear how many “Russian programs” should contain this or that device: one, two or one hundred, or some proportion is planned. That is, at what point the law will be considered complied with is unclear (obviously, the legislator plans to transfer this issue to the discretion of the Government).

If we talk about the possible consequences of its introduction, if it is finally adopted, then there are quite a lot of them:

• an increase in the cost of technically complex devices for which a mandatory requirement to pre–install “Russian programs” will be introduced (regardless of whether such programs are needed by the user – the manufacturer will be required to purchase a license for such programs);
• late entry into the market of new devices (financial conditions will need to be agreed with the copyright holders of “Russian programs”);
• manufacturers’ refusal to release individual devices in Russia;
• as a consequence of the last point – an increase in the volume of sales of counterfeit goods and gray imports (deprived of service support from the manufacturer and seller);
• a surge in consumer terrorism against technically complex goods for which mandatory pre-installation will be introduced.

Ultimately, the bill, in its current form, will not lead to increased consumer protection, but to the opposite effect – consumer rights will be infringed.

The only beneficiaries of the bill will be individual copyright holders of programs that will be included in the list approved by the Government for mandatory pre-installation. But even in this part, you can put a big question mark – perhaps it will simply be financially unprofitable for manufacturers to necessarily pre-install something and it will be easier not to release the goods in Russia.

Comments from the editors

The law has so far been adopted only in the first, “technical” reading. Theoretically, he may not go further. However, according to Lukyanov, the current law has strong support. Both the Information Policy Committee and the Government are in favor of it.

However, until the bill is finally adopted, according to Lukyanov, it is necessary to work with it. Including the game development industry. “Most likely, the project has a lobby. If you work with him, you can find and agree on some acceptable version,” the lawyer stressed in an interview with us.

Also on the topic:

• The State Duma adopted a law that prohibits the sale of devices without Russian software