BILL NUMBER: AB 1681INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Cooper JANUARY 20, 2016 An act to add Section 22762 to the Business and Profession Code, relating to smartphones. LEGISLATIVE COUNSEL'S DIGEST AB 1681, as introduced, Cooper. Smartphones. Existing law requires that a smartphone that is manufactured on or after July 1, 2015, and sold in California after that date, include a technological solution at the time of sale, which may consist of software, hardware, or both software and hardware, that, once initiated and successfully communicated to the smartphone, can render inoperable the essential features, as defined, of the smartphone to an unauthorized user when the smartphone is not in the possession of an authorized user. This bill would require a smartphone that is manufactured on or after January 1, 2017, and sold in California, to be capable of being decrypted and unlocked by its manufacturer or its operating system provider. The bill would, except as provided, subject a seller or lessor that knowingly failed to comply with that requirement to a civil penalty of $2,500 for each smartphone sold or leased. The bill would prohibit a seller or lessor who has paid this civil penalty from passing any portion of the penalty on to purchasers of smartphones. The bill would authorize only the Attorney General or a district attorney to bring a civil suit to enforce these provisions. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 22762 is added to the Business and Professions Code, immediately following Section 22761, to read: 22762. (a) For the purposes of this section, the following terms have the following meanings: (1) "Smartphone" has the same meaning as in Section 22761. (2) "Sold in California" has the same meaning as in Section 22761. (3) "Leased in California," or any variation thereof, means that the smartphone is contracted for a specified period of time to an end-use consumer at an address within the state. (b) A smartphone that is manufactured on or after January 1, 2017, and sold or leased in California, shall be capable of being decrypted and unlocked by its manufacturer or its operating system provider. (c) Except as provided in subdivision (d), a seller or lessor that sells or leases in California a smartphone manufactured on or after January 1, 2017, that is not capable of being decrypted and unlocked by its manufacturer or its operating system provider shall be subject to a civil penalty of two thousand five hundred dollars ($2,500) for each smartphone sold or leased if the seller or lessor of the smartphone knew at the time of the sale or lease that the smartphone was not capable of being decrypted and unlocked by its manufacturer or its operating system provider. A seller or lessor who pays a civil penalty imposed pursuant to this subdivision shall not pass on any portion of that penalty to purchasers of smartphones by raising the sales or lease price of smartphones. (d) (1) The sale or lease of a smartphone manufactured on or after January 1, 2017, that is not capable of being decrypted and unlocked by its manufacturer or its operating system provider shall not result in liability to the seller or lessor if the inability of the manufacturer and operating system provider to decrypt and unlock the smartphone is the result of actions taken by a person or entity other than the manufacturer, the operating system provider, the seller, or the lessor and those actions were unauthorized by the manufacturer, the operating system provider, the seller, or the lessor. (2) Paragraph (1) does not apply if at the time of sale or lease, the seller or lessor had been notified that the manufacturer and operating system provider were unable to decrypt and unlock the smartphone due to those unauthorized actions. (e) A civil suit to enforce this section may only be brought by the Attorney General, for the sale or lease of a smartphone in California, or a district attorney for the sale or lease of a smartphone in the county represented by the district attorney. A seller or lessor shall not be subject to more than a single penalty for each sale or lease of a smartphone.