August 27, 2016

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iPhone Unlocked; Legal Battle Looming?

In the past few days several groups declared victory in the battle to unlock the iPhone – to make the iPhone work on cellular networks other than AT&T’s. New Jersey teenager George Hotz published instructions (starting here) for a geeks-only unlock procedure involving hardware and software tweaks. An anonymous group called iPhoneSimFree reportedly has an easy all-software unlock procedure which they plan to sell. And a company called UniquePhones was set to sell a remote unlocking service.

(Technical background: The iPhone as initially sold worked only on the AT&T cell network – the device was pretty much useless until you activated AT&T wireless service on it. People figured out quickly that you could immediately cancel the wireless service to get an iPhone that worked only via WiFi; but you couldn’t use it on any other mobile phone/data network. This was not a fundamental technical limitation of the device, but was instead a technological tie designed by Apple to drive business to AT&T.)

Unlocking the iPhone helps everybody, except AT&T, which would prefer not to face competition in selling wireless services to iPhone users. So AT&T, predictably, seem to be sending its lawyers after the unlockers. UniquePhone, via their iphoneunlocking.com site, reports incoming lawyergrams from AT&T regarding “issues such as copyright infringement and illegal software dissemination”; UniquePhones has delayed its product release to consider its options. The iPhoneSimFree members are reportedly keeping anonymous because of legal concerns.

Can AT&T cook up a legal theory justifying a ban on iPhone unlocking? I’ll leave that question to the lawyers. It seems to me, though, that regardless of what the law does say, it ought to say that iPhone unlocking is fine. For starters, the law should hesitate to micromanage what people do with the devices they own. If you want to run different software on your phone, or if you want to use one cell provider rather than another, why should the government interfere?

I’ll grant that AT&T would prefer that you buy their service. Exxon would prefer that you be required to buy gasoline from them, but the government (rightly) doesn’t try to stop you from filling up elsewhere. The question is not what benefits AT&T or Exxon, but what benefits society as a whole. And the strong presumption is that letting the free market operate – letting customers decide which product to buy – is the best and most efficient policy. Absent some compelling argument that iPhone lock-in is actually necessary for the market to operate efficiently, government should let customers choose their cell operator. Indeed, government policy already tries to foster choice of carriers, for example by requiring phone number portability.

Regardless of what AT&T does, its effort to stop iPhone unlocking is likely doomed. Unlocking software is small and easily transmitted. AT&T’s lawyers can stick a few fingers in the dike, but they won’t be able to stop the unlocking software from getting to people who want it. This is yet another illustration that you can’t lock people out of their own digital devices.

Comments

  1. avatar Anonymous says:

    Can AT&T cook up a legal theory justifying a ban on iPhone unlocking?

    They can’t but will nonetheless legally intimidate high-profile unlockers and apparently have already. Individuals do not have the resources to enter into a lawsuit. Never mind the money, the time and disruption to one’s life is more than enough to make one capitulate immediately. The fact that big companies can effectively impose their own pseudo-‘laws’ on individuals in this manner is outrageous injustice.

  2. I don’t understand why AT&T thinks they can lock people into their service when they didn’t even provide the “reduced price” on the phone like they do on other phones.

    You know, when they claim a 5 year old phone is worth $600 but “only $50 with contract.”

    Had they offered the $600 iPhone for $200 with contract, I could see them having some right to ensure they recoup their “discount” but since the iPhone was sold at full price, tough cookies.

  3. avatar Kit Walker says:

    The problem with that sentiment is that whoever purchases the iPhone purchases it “as-is”, without the right to modify it. It’s illegal to alter it not so the government can step in and make people only purchases AT&T-brand telephony and services, but because the user breaches the contract made in the very purchase.

    I’m all for being allowed to do whatever one wants with what one owns–but there are limits, and those limits are what the contracts outline at the time of purchasing. In short, if you don’t like what the company (or companies, in such cases as the Apple/AT&T team-up) allows and disallows with their product, don’t purchase their product. Besides, there are much better phones out there that also offer more freedom.

    http://www.nokiausa.com/link?cid=EDITORIAL_185360

  4. avatar Leonaltro says:

    I’m with Kit on this one.
    We have a similar situation here in Italy.
    We normally buy our phones separately from the cell-contract, so we enjoy a relative degree of freedom in this sense. But the fourth cell operator to come to the market – H3G – tried to gain some market share by basically giving away very expensive phones, and asking in return (in the contract) that you stay with them for two years.
    A lot of people were taking the phones, unlocking them and using their old SIM from other operators, which in my eyes means ripping H3G off.

  5. “Unlocking the iPhone helps everybody, except AT&T, which would prefer not to face competition in selling wireless services to iPhone users.”
    I don’t think it helps Apple either: they take a cut based on the number of sign-ups in return for the exclusive deal with AT&T in the US

  6. avatar Matthew Ellis says:

    Unlocking the iPhone helps everybody, except AT&T …

    I have read that Apple is getting a monthly cut of revenue from AT&T iPhone users.

    One link

    That said, I am sure Apple would rather sell more iPhones than receive revenue streams from a smaller user base forced onto AT&T networks only, but I am not an economist.

  7. avatar I R A Darth Aggie says:

    Wait till Apple’s start firing off nasty-grams. I won’t say they’re experts on wacking people and/or websites that post information contrary to their marketing departent’s idea of what should be diseminated, but they’re defintely in the top 5.

  8. avatar I R A Darth Aggie says:

    Wait till Apple’s lawyers start firing off nasty-grams. I won’t say they’re experts on wacking people and/or websites that post information contrary to their marketing departent’s idea of what should be diseminated, but they’re defintely in the top 5.

  9. If you purchased an iPhone retail, without signing anything — just the usual you swipe your card and enter your PIN, phone goes in a bag, you walk out the store with your new toy — then you can tinker with it as much as you like without being in breach of any contract.

    If you sign a contract with Apple or AT&T of course you might then be able to breach it.

    Even then it isn’t *illegal*, as in a violation of the Criminal Code, to tinker with the thing.

    Of course, no matter what, it likely voids your warranty.

    As for Apple benefiting or not from this, it really depends on whether the decreased revenue from AT&T kickbacks does or doesn’t outweigh the increase in revenue from selling iPhones to a wider audience. Ability to unlock the phone adds value, so sales should increase; especially sales to people who would like an iPhone but detest AT&T.

  10. Kit Walker,

    To say that an iPhone comes “without the right to modify” is just to assume an answer to the policy question. *Why* isn’t there a right to modify?

  11. avatar Crystalman says:

    I just read a post that ATT gave notification of copyright infringement, and illegal dissemination of software. Interesting – Did ATT write the software in the firmware of the iPhone? Or did Apple? Apple might have packed a EULA somewhere in the manual of the iPhone, and that might prohibit “reverse engineering”, but I don’t see how that would connect to ATT, and how they think they have the teeth to stop this. Boo hoo it breaks their monopoly.

  12. > Can AT&T cook up a legal theory justifying a ban on iPhone unlocking?

    Of course, I’m sure there’s some kind of encryption somewhere on the phone, then all they have to do is cry, “DMCA! DMCA!” and all their problems disappear.

    At least that’s what the mommies and daddies of CEOs tell them in their bedtime stories to get them to sleep soundly.

  13. avatar Kit Walker says:

    Eduardo: For one thing, as Bean alluded to, there is “copyright protection software” on the iPhone, and thus Apple may be able to make the claim that such tinkering does an end-run around that software.

    For another thing, since Apple made it so difficult to unlock, the obvious inference is that they do not want it unlocked. The “why” of it is up for debate, but the fact remains that the people who made this product want it used in this fashion.

    I’ve looked through the myriad agreements an iPhone user would be expected to adhere to (whether they read them before purchasing the iPhone or not) and can’t find anything that explicitly says to not unlock the part of the phone that governs telephony, but even the “copyright software” thing aside, a legal case of intent to harm the brand name could, I’d imagine, be made.

    Whether it would work or not, I don’t know, but I think few people would really want to go to court against Apple and AT&T to find out.

  14. avatar David Robarts says:

    DMCA will get Apple/AT&T nothing as there is *currently* an exception for working around carrier locks on cell phones. Apple has pushed out two updates to iPhone software without any noticeable effort to stop hacking, so Apple’s intent to keep the iPhone locked down tight is becoming a gray area. Apple certainly doesn’t support third party modification, but has yet to get in the way either. Maybe Apple let AT&T write the behind the scenes software to enable to locking and is sitting back laughing at the futility of it just like they are doing with the music industry and DRM.

  15. This is interesting as a hypothetical exercise, but at this point, iPhoneunlocking.com has no credibility. They’ve made various claims since the iPhone was released that they’d have something within a couple of days or a week, that they’ve been beta testing, etc. Nothing ever comes of it. This latest talk of threats from AT&T sounds like another diversion.

    I think they are trying to build links to their site so they come up high in google search results for iPhone related searches. Then they’ll either flip the domain, plaster it with ads, or, sell an unlock someday, whether they develop it themselves, or end up acquiring it, perhaps by wholesaling iphonesimfree’s solution.

  16. An unlocked appliance rises in value in my estimation; it’s simply a better business model for the jesus phone to be more flexible and less crapulent. As for the “contract” violation – Bulls—! I’ll be damned if I’m to be constrained by the corporate swinery of SJobs/AT&T or any other corporate ‘structured’ deals! Just what does “ownership” consist of anymore??
    “If you can’t open it, you don’t own it.” -MAKE mag

  17. avatar Curtis Carmack says:

    David Robarts nailed it. The Library of Congress recently issued its latest list of exemptions from the DMCA, and one of them allows cellphone owners to circumvent technological protection measures to unlock their phones. This would derail DMCA lawsuits, though AT&T might try other copyright or contract claims. I think that in the end, this will be a losing battle for AT&T, and that Apple will not be surprised by that result. Jobs secretly thumbing his nose at AT&T could hardly be unanticipated by those who follow his unique “partnering” tactics. Pretty funny . . .

  18. I’d have to guess that there is some merit to David Robarts’ suggestion about Apple’s general indifference iPhone owners’ choice of carrier. To me, Apple+AT&T came about only because of the visual voicemail feature. In order to get AT&T to develop the infrastructure related to visual voicemail – and let the phone control the playback of messages, instead of the carrier touch-tone menu – Apple seems to have agreed to the contract with AT&T. From the reaction (or lack thereof) from Apple, I’m guessing they really don’t care too much if a iPhone purchaser disables their carrier lock (one of the few rights given to us by the DMCA).

    Apple does get a cut of AT&T subscribers’ service contract, but the iPhone isn’t like a game system such as the PS3 and Xbox 360. Apple makes a profit on each iPhone sold. My bet is that Apple’s game plan here is to begin distancing themselves from AT&T, and make no major moves to technically or lawfully stop the unlocking. Once Apple’s contract with AT&T is up, it is almost certain that they will make a wide variety of phones which function on more than just GSM. I’m betting that Apple just dealt with AT&T to ensure the successful infancy of their entrance into the market.

    Apple isn’t a network provider, and they appear to be mostly interested in hardware, software, and music sales. Unless Apple decides to somehow become a wireless carrier, I don’t think they have much interest in prohibiting an action which is clearly and specifically excluded from the DMCA.

  19. It’s not a policy question, it’s a question of contract. If in exchange for the phone you sign a contract promising to only use it with AT&T’s network, that should be the end of the analysis. Anybody else is free to design and build their own phones and sell them under any terms they want. If you don’t like AT&T’s terms, start your own phone company.

    Should the “freedom to tinker” override the promises people make in contracts?

  20. avatar Frater Plotter says:

    Hal:

    No such contract is in evidence. When people go to a store and purchase an iPhone, they do so as an ordinary sale transaction without any additional contract or rider.

  21. While it is true that any non-AT&T sim card won’t function natively with the iPhone, it still is an assumption to say that the iPhone has “copyright protection software” which specifically serves as the technical protection measure that causes this incompatibility.

    Sure, there is likely code in the iPhone OS which specifically interrogates the sim card for particular values or characteristics, but is it accurate to say that this code in place to protect copyright, or is it more accurate to say that this code is in place to deny interoperability with other sim cards?

    Or to put it another way, would the iPhone be materially different in any way when used with an AT&T sim card if, at the same time, it also had the capability of accepting other sim cards.

    The Lexmark case is possibly analogous. There is nothing fundamentally inherent about Lexmark printers that cause them to require the use of Lexmark ink. Lexmark forced the lack of interoperability by adding code to deny interoperatibly with non-Lexmark ink cartridges. Did Lexmark do this to protect their copyright, or to deny interoperability?

    Denying interoperability, it if is the exclusive or primary motive, is not good policy and deserves no protection – and certainly not copyright protection.

  22. Would it always be a question of a signed contract? As far as I know, anyone can leave an Apple Store without signing a contract. There may be some shrink wrap license agreement inside the box (I don’t know), but that is another issue.

    It is only if you contact and contract with AT&T that a signed contract comes into play. There is no requirement that you do this – although, I’m betting that this will change.

    Or, what if I buy an iPhone, sign a contract with AT&T, and after a month decide that AT&T service is sucky and I don’t want to use it. I pay AT&T the $175 fee to end my contract early. The iPhone still belongs to me. What contract am I under at this point? Or suppose after I pay my contract termination fee, I put my orphaned iPhone up for auction on eBay. What contract is the new buyer obligated to honor?

    Apple and AT&T chose to make hardware acquisition and service acquisition separate transactions.

  23. avatar Love those Telcos says:

    I do not know how many people actually buy an iphone and how that number compares to the total number of cell phone sales, but I guess an iphone customer is rather exotic. So why bother with locking the firmware and sending the lawyers after the unlockers? It makes no sense to put so much effort on building a monopoly in a few percent niche market. But it might make sense if the purpose is to establish precedence. There are now a few open source cell phone projects emerging and they might be a future threat for the AT&T monopoly. AT&T is clearly becoming the major wireless player in the USA. By locking all phones, not just the iphone, they will make it more difficult for customers to choose and at the same time AT&T can kill that little bit of competition that is left. With the iphone AT&T may just try to establish what turned out so difficult with the Razor Blade model.

    I suggest that the AT&T lawyers have a look at the Lexmark case. The 6th US Circuit Court of Appeals rejected Lexmark’s claim that third parties and customers have no right to use third party software (or printer cartridges!) on the customers’ printers. BTW the EU has banned such locked cartridges by law (to support recycling, not to improve the customers’ rights, though). I wish we could see such a law for a wider variety of products, such as cell phone, media and media players/writers etc., and for the purpose of improving customers’ rights.

    In the meantime, why bother with the iphone at all? As a phone it locks its users, as a tiny computer it lacks features found elsewhere and it is way too expensive.

  24. //For another thing, since Apple made it so difficult to unlock, the obvious inference is that they do not want it unlocked.//

    So?

    Many products are difficult to open. Presumably the manufacturers would just as soon that people not open them. In general, though, manufacturers have no legal recourse against people who do so anyway; I see no reason for Apple to have special recourse here.

    Of course, if someone signed a contract with AT&T that said they’d pay $XX/month for service for 24 months, their obligation to keep paying AT&T $XX/month wouldn’t go away even if they switched their phone to some other carrier. But if the person kept paying the $XX/month I see no legitimate reason for AT&T to complain.

  25. I don’t see how copyright infringement is relevant since nothing was copied.

    However, there is a provision in the DMCA that makes “reverse engineering of security technology” now an official act of naughtiness, right? So whether this is security technology and whether this is “unlocking your phone” is something that the lawyers are going to get to argue about. Ain’t it just great how there’s always more work for lawyers no matter what?

    And for a few folks above, I don’t have the faintest idea where you get the notion that “As-Is” implies “can’t modify”.

  26. //I wish we could see such a law for a wider variety of products, such as cell phone, media and media players/writers etc., and for the purpose of improving customers’ rights.//

    So do I. If someone signs a contract with a printer manufacturer stating they will only use that manufacturer’s ink, the person should be so bound. Some high-end printers have indeed been sold with such contracts, though I’m unaware of the principle being applied to cheap ones.

    I would like to see some laws make clear, however, that copyright and patent laws may not be used to protect features whose sole purpose is to block interoperability, except in cases where such blocking is desired by the purchaser (who may not be the end-user).

    If a printer manufacturer happened to patent a particularly-fast-drying ink, and the printer would work poorly with other types of ink, such a patent should remain protected. Competitors should not be allowed to reproduce the fast-drying ink just to allow interoperability. On the other hand, competitors should be free to try to work out ways to modify the printer so as to work better with non-patented slower-drying inks. If that entails using a different print head, and that in turn requires spoofing some printhead-authentication mechanism, then that should be allowed.

    There would be some interesting gray areas, though if manufacturers were to explicitly make it possible–but a pain in the butt–to use competing products. If a print driver showed a small message in the main print setup dialog saying either “Genuine ACME printhead installed” or “Third-party printhead installed”, but otherwise acted identially for both, it would be hard to justify any legitimate reason for spoofing the printhead code. But if the “Third-party printhead” popped up as an extra dialog every time someone tried to print, and if such dialog couldn’t be disabled, that would probably provide a reason. Still interesting to ponder…

  27. I bought a hammer at the hardware store the other day, only I didn’t like the handle: you see, I’m quite tall so the hammer felt just a _little bit_ too short.

    So I cut the handle in half and glued an extra piece in the middle. Once all the glue set it worked just fine for my purposes.

    Only thing is… now the Feds are after me! I Altered A Product To My Own Liking! I’m on the run, and I haven’t seen my family in weeks!

    Turns out that by buying the hammer I wasn’t actually buying the hammer, I was just buying the right to USE the hammer!! If only I’d known that purchasing a product doesn’t give me full rights to use it in any way I see fit…

  28. I want to reiterate that contract law is the best way to handle this. If there is no contract when the iPhone is sold, you the purchaser are under no obligation to anyone to use the phone in a certain way. I realize that the DMCA may say otherwise but I think we mostly all agree that it is an immoral law.

    If Apple and AT&T are unhappy with what is happening, they can easily decide to only sell phones with signed contracts. Presto, their problem is solved. And it doesn’t take a huge nationwide technology policy debate or new legislation to solve it. It is an easy solution that can be implemented solely by the parties affected.

    Contract law has been around for a long time, and it is a solid foundation for dealing with these kinds of problems. As a solution it cuts both ways, not necessarily favoring either consumers or manufacturers. It is flexible and facilitates markets where a variety of approaches are tried in competition with each other. I wish that “freedom to tinker” were more often seen within the framework of “freedom to contract”.

  29. Simply put the phone was not subsidize by att. i can go into an apple store right now and just buy one. i do not have to connect it to atts network. it will just not be a phone. it will be a glorified ipod. the DCMA allows me to unlock my phone for the lawful purpose of joining a legal network. i did not sign a contract with att nor apple. it is of no matter to me that att and apple have gotten together to share the revenue of this device.

  30. If you look at the Lexmark and Chamberlain cases, the courts were not prepared to interpret the DMCA in such a way as to protect access contols which themselves did not guard a separate copyrightable work. And absent a contract, and given the DMCA exemption for unlocking phones, it is hard to see what the basis of litigation might be.

    Maybe we have reached the stage where corporations threaten to sue, even if there is no legal remedy for the issue they are complaining about.

    They used to say that the only people who made money out of DRM were those who sold it, but I think you can add lawyers as well.

    Whilst on the subject of DRM, there is a potential new Sony rootkit scandal in the making. Take a look at:

    http://www.technewsworld.com/story/59071.html

  31. Apparantly they are arguing that the exemption in the DMCA for unlocking cell phones does not extend to telling someone else how to do it!

  32. avatar Anonymous says:

    As a solution it cuts both ways, not necessarily favoring either consumers or manufacturers. It is flexible and facilitates markets where a variety of approaches are tried in competition with each other. I wish that “freedom to tinker” were more often seen within the framework of “freedom to contract”.

    An overly simplistic view.
    Contracts routinely favor the party with more organization and bargaining power: big companies. Some contractual terms are unconscionable and are not permitted by law, often to protect individuals (e.g. I believe right of resale cannot be abridged). Likewise, the ‘freedom to tinker’ should never be abridged. Such an egregious restriction on liberty of action and thought, causing no actual^ harm to anyone, cannot be justified.

    ^ Not enforcing benefit or privileges is not the same as inducing harm.

  33. DMCA is an American copyright law and uniquePhones is a Belfast (European) based company. If they had any sense they’d should say screw the US and concentrate on the European/Asian markets, traditionally they have been much bigger adopters of mobile phone technology. Admittedly they’d be a little stymied by the iPhone only being for sale in the US. However an eBay search later that could also be taken care of, do you think Apple is going to not sell iPhones if people want to buy them.

  34. Profiteering will be illegal, i.e belfast co.
    software replacement will not.
    6 Rulemaking Exemptions to Section 1201 of the DMCA:
    http://www.copyright.gov/1201/

    5. Computer programs in the form of firmware that enable wireless telephone handsets to connect to a wireless telephone communication network, when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network.

    These exemptions went into effect upon publication in the Federal Register on November 27, 2006, and will remain in effect through October 27, 2009.

  35. avatar Anonymous says:

    DMCA is an American copyright law and uniquePhones is a Belfast (European) based company.

    You do know that American foreign policy has ‘exported’ the DMCA internationally right?

    EUCD

  36. I like he idea that the government should not regulate what software I choose to run on any device I purchase. Until it comes to the exceptions, like cars. Would you share the highways with thousands of drivers who have modified heir car’s control software? I think some control of this sort has to be reasonable.

  37. You do know that American foreign policy has ‘exported’ the DMCA internationally right?

    EUCD

    Fair point, but thus far there haven’t been any big legal stoushes using the EUCD as there has been for DMCA. However now that I have said it, there probably will be one soon. I was just a bit taken that the majority of all these comments are DMCA, there is a whole other planet out there.

  38. Why don’t hackers (companies) distribute the unlocking software and request a donation those who have registered their iphone outside of the US. This will provide much needed revenue to fight back and continue to support us suppressed users…

  39. and you just know deep inside, Steve Jobs is grinning

  40. avatar Sanatan Rai says:

    It is not clear to me why cell phones/computers/electronic devices should be any different from automobiles. There is a vibrant market—in fact a whole niche industry devoted to tuning or modifying cars from standard marques. The modifications usually void any warranties, but certainly no automobile manufacturer has tried to take them to court.

    Moreover, it is my impression that under European laws, car manufacturers are obliged to keep their design `open’ ie they may not `obscure’ it in any fashion (I hope someone will correct me if I am wrong, or provide a better description).

  41. In need of an iPhone, i got the software to unlock it all i need now is the Phone! Will pay $300-400 for a used iphone, prefer 8GB one

  42. I’m surprised that after 45 comments, no one has mentioned the supreme court Carterfone decisions that gave customers the right to buy their own phones and connect whatever they want to the network as long as the device didn’t cause any harm to the network.

    More commentary here:
    http://www.securitystory.com/archives/000143.html

  43. avatar FREE WILL says:

    TO Kit Walker …YOU ARE ONE STUPID PERSON WITH YOUR STUPID COMMENTS ABOUT ILLEGAL SHIT. THINK ABOUT BUYING A NEW VEHICLE NOW, NO MATTER WHERE YOU BUY OT WHAT YOU BUY THE SERVICE LIGHT IS PROGRAM SO CONSUMER KNOW NOTHING ABOUT MECHANICS IS FORCE TO GO BACK TO THE DEALER TO SPEND MONEY BECAUSE SERVICE LIGHTS ACTIVATED ON THE MILES PROGRAM FOR SERVICE AND MOST CONSUMERS DID NOT KNOW IF THEY CAN TAKE THIER CAR FOR SERVICE TO OTHER CHEAP CERTIFIED MECHANINCS, BECAUSE DEALERS THREAT SAYING “”YOU ARE VOIDING YOUR WARRANTEE CONTRACT ….SO YOU WAKE DUDE THIS IS YEAR 2008 2009 AND MORE YEARS TO COME. U ARE NOT SMART AT ALL.