Amended in Assembly June 12, 2014

Amended in Assembly June 2, 2014

Amended in Senate May 5, 2014

Amended in Senate April 9, 2014

Amended in Senate March 24, 2014

Senate Bill No. 962

Introduced by Senator Leno

(Coauthors: Senators begin insert DeSaulnier, end insert Hancock, Pavley, and Wolk)

(Principal coauthor: Assembly Member Skinner)

February 6, 2014

An act to add Section 22761 to the Business and Professions Code, relating to mobile communications devices.

LEGISLATIVE COUNSEL’S DIGEST

SB 962, as amended, Leno. Smart phones.

Existing law regulates various business activities and practices, including the sale of telephones.

This bill would require that any smartphone, as defined, that is manufactured on or after July 1, 2015, and sold in California after that date, include a technological begin delete solution, end delete begin insert solution at the time of sale, end insert which may consist of software, hardware, or both software and hardware, that begin insert , once initiated and successfully communicated to the smartphone, end insert can render inoperable the essential features, as defined, of the smartphone to an unauthorized user when the smartphone is not in the possession of begin delete the rightful owner. end delete begin insert an authorized user. end insert The bill would require that the technological solution begin insert , when enabled, end insert be able to withstand a hard reset, as defined, and begin delete when enabled, end delete prevent reactivation of the smartphone on a wireless network except by begin delete the rightful owner or his or her end delete begin insert an end insert authorized begin delete designee. end delete begin insert user. end insert The bill would make these requirements inapplicable when the smartphone is resold in California on the secondhand market or is consigned and held as collateral on a loan. begin delete The bill would prohibit the sale of a smartphone that is manufactured on or after July 1, 2015, and sold in California after that date, unless, during the initial device set-up process, the smartphone’s default setting is to prompt the user to enable the technological solution. end delete The bill would authorize begin delete the rightful owner end delete begin insert an authorized user end insert to begin delete affirmatively elect to end delete begin insert opt-out of the technological solution during the initial device set-up process and to end insert disable the technological solution at begin delete anytime. end delete begin insert any time. end insert The bill would make begin delete a end delete begin insert the end insert knowing begin insert retail sale in end insert violation of the bill’s requirements begin delete by a retail entity end delete subject to a civil penalty of not less than $500, nor more than $2,500, for each violation. The bill would limit an enforcement action to being brought by the Attorney General, a district attorney, or city attorney, and would prohibit any private right of action to enforce the bill’s requirements.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) According to the Federal Communications Commission,
smartphone thefts now account for 30 to 40 percent of robberies
in many major cities across the country. Many of these robberies
often turn violent with some resulting in the loss of life.

(b) Consumer Reports projects that 1.6 million Americans were
victimized for their smartphones in 2012.

(c) According to the New York Times, 113 smartphones are
lost or stolen every minute in the United States.

(d) According to the Office of the District Attorney for the City
and County of San Francisco, in 2012, more than 50 percent of all
robberies in San Francisco involved the theft of a mobile
communications device.

(e) Thefts of smartphones in Los Angeles increased 12 percent
in 2012, according to the Los Angeles Police Department.

(f) According to press reports, the international trafficking of
stolen smartphones by organized criminal organizations has grown
exponentially in recent years because of how profitable the trade
has become.

(g) In order to be effective, antitheft technological solutions
need to be ubiquitous, as thieves cannot distinguish between those
mobile communications devices that have the solutions enabled
and those that do not. As a result, the technological solution should
be able to withstand a hard reset or operating system downgrade,
come preequipped, and the default setting of the solution shall be
to prompt the begin delete user end delete begin insert consumer end insert to enable the solution during the
initial device setup. Consumers should have the option to
affirmatively elect to disable this begin delete protection. end delete begin insert protection, but it must
be clear to the consumer that the function the consumer is electing
to disable is intended to prevent the unauthorized use of the device. end insert

SEC. 2.  

Section 22761 is added to the Business and Professions
Code, to read:

22761.  

(a) For purposes of this section, the following terms
have the following meanings:

(1) (A) “Smartphone” means a cellular radio telephone or other
mobile voice communications handset device that includes all of
the following features:

(i) Utilizes a mobile operating system.

(ii) Possesses begin delete advanced computing capability. end delete begin insert the capability to
utilize mobile software applications, access and browse the
Internet, utilize text messaging, utilize digital voice service, and
send and receive email. end insert

(iii) Has wireless network connectivity.

(iv) Is capable of operating on a long-term evolution network
begin delete and end delete begin insert or end insert successor wireless data network communication standards.

begin delete

(B) A smartphone may possess, but is not limited to, the
following capabilities:

end delete begin delete

(i) Built-in mobile software applications.

end delete begin delete

(ii) Internet access.

end delete begin delete

(iii) Digital voice service.

end delete begin delete

(iv) Text messaging.

end delete begin delete

(v) The ability to send and receive electronic mail.

end delete begin delete

(vi) Internet Web site browsing.

end delete begin delete

(C)

end delete

begin insert (B) end insert  A “smartphone” does not include begin delete a radio cellular telephone
commonly referred to as a “feature” or “messaging” telephone, end delete a
laptop, a tablet device, or a device that only has electronic reading
capability.

(2) “Essential features” of a smartphone begin delete include end delete begin insert are end insert the ability
to use the device for voice communications begin insert , text messaging, end insert and
the ability to browse the Internet, including the ability to access
and use mobile software begin delete applications commonly known as “apps.” end delete
begin insert applications. end insert “Essential features” begin delete does end delete begin insert do end insert not include any
functionality needed for the operation of the technological begin delete solution. end delete
begin insert solution, nor does it include the ability of the smartphone to access
emergency services by a voice call or text to the numerals “911,”
the ability of a device to receive wireless emergency alerts and
warnings, or the ability to call an emergency number predesignated
by the owner. end insert

(3) “Hard reset” means the restoration of a smartphone to the
state it was in when it left the factory, and refers to any act of
returning a smartphone to that state, including processes commonly
termed a factory reset or master reset.

(4) “Sold in begin delete California” end delete begin insert California, end insert begin insert ” or any variation thereof, end insert
means that the smartphone is sold at retail from a location within
the state, or the smartphone is sold and shipped to an end-use
consumer at an address within the state. “Sold in California” does
not include a smartphone that is resold in the state on the
secondhand market or that is consigned and held as collateral on
a loan.

(b) (1) Any smartphone that is manufactured on or after July
1, 2015, and sold in California after that date, shall include a
technological begin delete solution, end delete begin insert solution at the time of sale, end insert to be provided
by the manufacturer or operating system provider, that begin insert , once
initiated and successfully communicated to the smartphone, end insert can
render the essential features of the smartphone inoperable to an
unauthorized user when the smartphone is not in the possession
of begin delete the rightful owner. end delete begin insert an authorized user. The smartphone shall,
during the initial device set-up process, prompt an authorized user
to enable the technological solution. end insert The technological solution
shall be reversible, so that if begin delete the rightful owner end delete begin insert an authorized user end insert
obtains possession of the smartphone after the essential features
of the smartphone have been rendered inoperable, the operation
of those essential features can be restored by begin delete the rightful owner or
his or her authorized designee. end delete begin insert an authorized user. end insert A technological
solution may consist of software, hardware, or a combination of
both software and hardware, begin delete but shall be able to withstand a hard
reset, end delete and when enabled, begin insert shall be able to withstand a hard reset
or operating system downgrade and end insert shall prevent reactivation of
the smartphone on a wireless network except by begin delete the rightful owner
or his or her authorized designee. No smartphone that is
manufactured on or after July 1, 2015, may be sold in California
after that date unless, during the initial device setup process, the
smartphone’s default setting is to prompt the user to enable the
technological solution. end delete begin insert an authorized user. end insert

begin delete

(2) The “essential features” that are required to be rendered
inoperable pursuant to this subdivision do not include the ability
of the smartphone to access emergency services by a voice call or
text to the numerals “911,” the ability of a device to receive
wireless emergency alerts and warnings, and the ability to call an
emergency number predesignated by the owner.

(3)

end delete

begin insert (2) end insert   begin delete The rightful owner end delete begin insert An authorized user end insert of a smartphone may
begin delete affirmatively elect to end delete begin insert opt-out of the technological solution during
the initial device set-up process and may end insert disable the technological
solution at begin delete anytime. end delete begin insert any time. end insert However, the physical acts necessary
to disable the technological solution may only be performed by
the end-use consumer or a person specifically selected by the
end-use consumer to disable the technological solution.

(c)  begin delete A retail entity that knowingly sells end delete begin insert The knowing retail sale
of end insert a smartphone in California in violation of subdivision (b) may
be subject to a civil penalty of not less than five hundred dollars
($500), nor more than two thousand five hundred dollars ($2,500),
per device sold in California. A suit to enforce this section may
only be brought by the Attorney General, a district attorney, or a
city attorney. begin insert A failure of the technological solution due to hacking
or other third-party circumvention may be considered a violation
for purposes of this subdivision, only if, at the time of sale, the
seller had received notification from the manufacturer or operating
system provider that the vulnerability cannot be remedied by a
software patch or other solution. end insert There is no private right of action
to enforce this section.

begin delete

(d) The seller of a smartphone, its employees, and its agents,
are not liable to any person for civil damages resulting from, or
caused by, failure of a technological solution, including any hack
or other third-party circumvention of the technological solution.
A failure due to hacking or other third-party circumvention may
be considered a violation for purposes of subdivision (c), only if,
at the time of sale, the seller had received notification from the
manufacturer that the failure existed and that it cannot be remedied
by a patch or other technological solution.

end delete begin insert

(d) The retail sale in California of a smartphone shall not result
in any civil liability to the seller and its employees and agents from
that retail sale alone if the liability results from or is caused by
failure of a technological solution required pursuant to this section,
including any hacking or other third-party circumvention of the
technological solution, unless at the time of sale the seller had
received notification from the manufacturer or operating system
provider that the vulnerability cannot be remedied by a software
patch or other solution. Except as provided in subdivision (c),
nothing in this subdivision precludes a suit for civil damages on
any other basis outside of the retail sale transaction, including,
but not limited to, a claim of false advertising.

end insert

(e) Any request by a government agency to interrupt
communications service utilizing a technological solution required
by this section is subject to Section 7908 of the Public Utilities
Code.

(f) Nothing in this section prohibits a network operator, device
manufacturer, or operating system provider from offering a
technological solution or other service in addition to the
technological solution required to be provided by the device
manufacturer or operating system provider pursuant subdivision
(b).

(g) Nothing in this section requires a technological solution that
is incompatible with, or renders it impossible to comply with,
obligations under state and federal law and regulation related to
any of the following:

(1) The provision of emergency services through the 911 system,
including text to 911, bounce-back messages, and location accuracy
requirements.

(2) Participation in the wireless emergency alert system.

(3) Participation in state and local emergency alert and public
safety warning systems.