Intuitively it feels strange to ask whether consumers have a legal right to unlock iPhones, their own personal property. We don’t ask whether someone has a right to change Internet providers while keeping the same computer. Yet Apple and AT&T are trying to convince the American public that there is something wrong with unlocking the iPhone so that it is operable with service providers other than AT&T.
In the Canadian context, earlier this year a Telus executive claimed that "unlocking a cell phone is copyright infringement. When you buy a handset from a carrier, it has programming on the phone. It's a copyright of the manufacturer."[1] This statement does not appear to mesh with Canadian copyright law; locking the phones has nothing do to with protecting against reverse engineering, and has everything to do with blocking competition. There is simply no illegal copying of software being carried out when a phone is unlocked.
What does American law have to say about unlocking cell phones? In the US there are laws that prohibit breaking a digital lock, but an exemption was created for cell phone locks. The Copyright Office of the Library of Congress last year issued a statement that unlocking cell phones for one's own use was not a violation of copyright under the Digital Millennium Copyright Act. [2] As the librarian wrote, the locks "are used by wireless carriers to limit the ability of subscribers to switch to other carriers, a business decision that has nothing whatsoever to do with the interests protected by copyright." [3]
On the other hand, if unlocking the phone for financial gain then the legality is more uncertain. A Florida-based company selling phones won an injunction in February against a couple who bought a large number of its phones and resold them unlocked. The U.S. District Court in Orlando found that the DMCA exception did not apply to those unlocking a phone with the intent to resell it. [4] A different situation involves attempts to profit financially from selling software that unlocks iPhones. This circumstance should be seen as analogous to the US case Lexmark, if Apple or AT&T were to commence legal action. In Lexmark a printer company tried to prevent the use of competitors' ink-jet cartridges in its printers. The court rejected Lexmark’s claims, and said that the lawsuit was about blocking competition and not piracy. [5]
A company named UniquePhones was prepared to sell a remote unlocking service for the iPhone, but has hesitated after being contacted by AT&T lawyers. This seems like pure intimidation, as small companies do not have the resources to enter into a lawsuit with a corporate giant such as AT&T. And what about Apple, does it really care that their iPhones are being unlocked? Probably not. Most US phones are locked to their carrier when sold, because the carrier subsidizes the cost of the phone. The iPhone, however, is apparently not subsidized by AT&T. Apple does get a cut of AT&T subscribers’ service contracts. As for Apple benefiting or not from unlocking, it really depends on whether the decreased revenue from AT&T kickbacks does or does not outweigh the increase in revenue from selling iPhones to a wider audience. The ability to unlock the iPhone adds value to the product, so sales should increase; especially sales to people who would like an iPhone but are against AT&T.
Since copyright law cannot prevent the unlocking of iPhones for personal use, some may argue that there is a breach of contract if in exchange for the phone you sign a contract promising to only use it with AT&T’s network. There is no evidence of any such contract; when people go to a store and purchase an iPhone, they do so as an ordinary sale transaction without any additional contract or rider. If Apple and AT&T are unhappy with what is happening, they can decide to only sell phones with signed contracts. Furthermore, both the U.S. and Canada have mandated wireless number portability, which is designed to allow consumers to switch carriers without being forced to change their phone number. It is obvious that locked cell phones go against this trend of encouraging competition in the marketplace. Denying the operability of the iPhone with multiple cell phone service providers is not good policy and deserves no protection, and certainly not copyright protection.
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[1] Michael Geist, “Unlocking the Mysteries of Locked Cellphones” (3 September 2007), online: Michael Geist, <http://www.michaelgeist.ca/content/view/2210/159/>.
[2] Peter Svensson, “IPhone Hackers Could Face Legal Battle”(29 Aug 2007), online: Yahoo, <http://biz.yahoo.com/ap/070829/iphone_unlocked.html> [Svensson, “IPhone Hackers”].
[3] Tim Wu, “The iPhone Freedom Fighters, Don't be Afraid: Unlocking Apple's Superphone is Legal, Ethical, and Just Plain Fun.” (4 October 2007), online: Slate, <http://www.slate.com/id/2175304/fr/rss/> [Wu, “iPhone Freedom Fighters”].
[4] Svensson, “IPhone Hackers”, supra note 2.
[5] Wu, “iPhone Freedom Fighters”, supranote 3.