Can Apple + AT&T Shut Down iPhone Unlockers?

aalobode writes "Do Apple and AT&T have the legal right to stop hackers from selling unlocked iPhones? Under their terms, only AT&T may sell iPhones, and Apple gets a commission. When unlocked iPhones are used on other providers' networks, AT&T and hence Apple get nothing beyond what they earned on the initial sale of the hardware. Can they prohibit unlocking? Reselling? The article in Businessweek gives the for and against arguments, but leans toward the view that the hackers may have the law on their side for once."

Re:"only AT&T may sell iPhones"

[conspirator57]

I agree with you, but Apple's figures probably include inventory sold to AT&T and people buying them for use on WLANs, as toys, etc.

Push comes to shove. . .

[TimmyDee]

If the group that has the real iPhone unlocking software does get hit with a legit lawsuit and has to cease and desist, here's to hoping they release it for free along with the source. What's to say they can't? At that point, they aren't selling something. Maybe they could take donations? IANAL, but I think such a move would be feasible.

That's why we can't have nice things.

[mcmonkey]

Not for nothing, but when the next gen iPhone comes out and it's store activation only and not home activation, you'll know why.

Stimpy?

[Anonymous Coward]

The Brain: Are you pondering what I'm pondering?

Pinky: I think so, Brain, but can the Gummi Worms really live in peace with the Marshmallow Chicks?

I guess it comes down to

[JustNiz]

I guess it comes down to who owns the phone.

If when you buy an iPhone you are actually buying the ownership to the phone, you can do what the hell you like to it as its yours.

but...

If Apple are just selling a licence to use the iPhone (kinda like what Microsoft do with Windows) rather than actually selling the ownership of the iPhone itself, then they could legally and justifiably require you not to unlock it as they still own it.

Do I own it or not

[backslashdot]

If it's illegal to unlock the phone, that means I dont own it. Am I leasing it? How the hell else is it possible for me to outright purcahse something and not be able to do whetever the hell i want with it (besides to commit something that is already a crime obviously -like throwing it at someone).

If I buy a t-shirt can they make it illegal for me to use it as a rag?

Is it illegal to color the iphone with a marker? Is it illegal to open up the iphone and melt it down? Is it illegal to take the battery out of the iphone and use the large battery in a hobby RC car project? If it is, it damn well shouldn't be.

the question really is

[botkiller]

The question really is not can they, it's _should_ they? They're liable to alienate a lot of potential customers if they start cracking down on everyone. I understand that it's a losing money situation, but they might stand to lose a lot more if they start crying foul left and right about this. Either way, it seems like it'll be hard for someone to immediately get T-mobile service on their hacked iPhone, but I could be wrong - I'm looking forward to the first story of someone who goes into a T-mobile store or thereabouts and requests service for their unlocked iPhone.

Doctrine of First Sale-Nobody Knows The Rules

[Nom du Keyboard]

I would say that under Doctrine of First Sale, you can do what you want with it once you own it.

However, manufacturers have managed to prevent you from modding your game console after you own it, or at least prevent other people from selling you mod chips and modding services, so now it's murky.

Wouldn't Ford love to only have you put Genuine Ford Advantage replacement parts in your car? They can't. Nor can they force you to only buy Ford approved gasoline from licensed dealers.

Yet Apple can't prevent you from putting non-iTMS purchased music into your iPod -- although that's probably because you'd never have bought the iPod if you couldn't rip your own albums and play them in it.

So what can, and cannot, Apple and AT&T do here? Besides scaring off potential unlockers, whatever the courts are willing to allow them to get away with. Clearly these days, there is no bright shining line of what's allowed, and what isn't.

Loan your new CD to your friend to listen to and the RIAA probably won't come knocking. Let him get the tracks through KaZaA and you may have an ugly time of it. Nobody knows the real rules any longer!

Re:Simple Echnomics...

[cowscows]

I think it's less about economics and more about technically inclined people enjoying one of their hobbies, messing around with technology. There's just a lot more news bits about this because of the hype that Apple and the iPhone have been through.

Just about every mobile phone ever made has probably had at least a few geeks pull it apart to tinker on the insides, you just didn't hear about it unless you went looking for the information. But in the case of the iPhone, Apple (and others) have already done the advertising for the iphone hacks, it tagged along with the advertising for the iphone itself.

While I have no doubt that you can find anecdotal evidence of people who would not have purchased an iPhone under AT&T now considering one, I would be very surprised if those people constitute a number that would make up a noticeable percentage of the iPhones out on the street.

Mod Chips

[thomas.galvin]

So why is this legal and mod chips illegal? What's so special about computer hardware when it's got an MS or Sony logo on it, as opposed to an Apple or AT&T logo?

Re:I guess it comes down to

[gfxguy]

I don't think they can do that, though. When you buy software, you are generally paying for the "right to use" the content on the media. You're allowed to microwave the disc, throw it out the window, make artwork out of it... you're just subject to copyright rules about the contents.

What you're looking for is if the end user agreement prohibits modifying or loading new software. I'm sure it prohibits modifying software, but if it's just a matter of a simple hardware hack and ADDITIONAL software, I don't see how there can be a legal standing against.

Probably the reason is because I'm not a lawyer, but it seems to me precedence is on our side.

Re:"only AT&T may sell iPhones"

[deander2]

haha....omg, who are the morons who moderated this informative? =p

Can't Use DMCA...

[maz2331]

They certainly can't use the DMCA to block the unlocking. This is almost identical to the Lexmark International, Inc. v. Static Control Components, Inc. case a couple years ago. Basic upshot of that ruling is that DMCA doesn't cover hacking to unlock a device for interoperability and third-party components.

If they try to sue using DMCA, they will almost certainly lose.

Re:"only AT&T may sell iPhones"

[MyLongNickName]

The question:

Form a square with every iPhone sold and mark the phones that are in the first row. Make a phone call from every marked iPhone to every activated iPhone. Place the phone bills in a circle, what is the circle's diameter?

If that is the question, then the answer is wrong. You cannot place a call to your own phone.

Re:No $#%!, Sherlock

[Anonymous Coward]

I am confused, the whole circumvention thing in the DMCA is to protect a copyrighted work to prevent unauthorized distribution of that copyrighted work. I don't think the agreement between Apple and AT&T is a copyrighted work. Hacking an iPhone to run your own applications is not taking or allowing a copyrighted work from either company and allowing it to be redistibuted. If so, will it public domain in death+75 years and who has to die for the counter to start?

Apple can provide controls to prevent you from redistributing their software and get protection from the DCMA but using that piece of hardware to run something else IMHO has NOTHING to do with copyright and the DMCA. What prevents MS from putting a rule or a software check in place that you can not run any office software except MS Office 2007 on your Windows PC. Getting around that artificial restriction is not violating a copyright agreement and would not involve the DMCA because getting around it is not allowing unrestricted access to a specific copyrighted work, it may be a licence or EULA violation but no DMCA protection there.

Law, schmaw -- this time, the tech is your problem

[Sloppy]

This product is not "merely" a phone, and the success of conventional unlocking techniques can't be relied upon indefinitely. Just look at the multitude of copy-protection (i.e. anti-interoperability) techniques that various industries are legally allowed to implement (even legitimized by laws like DMCA) and you will get some whiff of the disgusting things that Apple could put into a software update.

Sure, workarounds for these things will happen, but it won't exactly be easy, and it'll keep the users who take advantage of them at a disadvantage for purposes of (legitimate) software maintenance.

There's considerable precedent for the law allowing phone owners to use their phones however they wish, so I don't think that is worth worrying about.

If you want to worry about phones, the real issue is that you don't know what they're doing. [com.com] I think that phones are going to become THE poster-child for the risks of proprietary software, in a way that makes concerns about desktop operating systems, printer drivers, etc, seem trivial and superficial. The need for open and trustworthy phones is extreme, even if Joe Schmoe doesn't get it yet -- and the government is helping us quite a bit these days, in revealing that urgency.

Re:No $#%!, Sherlock

[Experiment 626]

Apple did take technological measures to assure their business agreement with AT&T was fulfilled and they do have technological measures to assure their device is not tampered with so there is actually quite a bit of room on Apple and AT&T's side for debate.

The DMCA prohibits circumventing technological measures that protect a copyrighted work from unauthorized duplication, not measures that protect a business agreement from becoming unprofitable.

Re:I guess it comes down to

[SpaghettiPattern]

I guess it comes down to who owns the phone.

If read the fine print correctly I apparently leased an Alco2Jet® Carbonator. [sodaclubusa.com] On the other hand, I never signed a contract of any kind and I refuse to acknowledge an EULA for hardware I buy.

I assume Sodaclub wants my money for their hardware, wants still to poses "my" hardware and wants to charge me for refills.

That last point alone is a reason to "illegally" fill my own "Alco2Jet® Carbonator" with cheap and illegal CO2. And when the secret police shows up at my door step I will tell them to piss off, fry on the chair for that and thus die a martyr for the right to own.

Re:a thought

[UbuntuDupe]

Yes, they will sue Apple over everything they do to promote AT&T-free iPhones ... that can be traced to Apple.

So, Apple is forced to half-heartedly admonishing people not to do it, removing discussion of how to unlock on Apple-run websites, etc.

But I'm sure Steve Jobs would love it if people bought iPhones and unlocked them, if otherwise they wouldn't buy one. He just can't talk about it.

Re:Do I own it or not

[MikeBabcock]

Its strange really, if you're an american its illegal to defeat copy protection software or hardware on your own devices under the DMCA, so congress apparently believes it has the right to restrict usage of your own private property already.

Re:I guess it comes down to

[elrous0]

When I buy a Xbox, I can do whatever the Hell I want with it too. But that hasn't stopped The U.S. government from raiding [escapistmagazine.com] companies that make mod chips for the Xbox.

Re:Yeah

[PitaBred]

The question is: Does it matter? The answer is, no it doesn't. If I buy hardware from someone with no signed contract alongside it, I own that hardware free and clear, and can do whatever I want with it. Including modify it, sell it, eat it, whatever.

Re:BBC is usually wrong about US law

[McFadden]

The British BC is usually wrong about the US legal system and even more off about Constitutional matters.

And your evidence is... Oh wait, you don't have any, because you just made that up.

IMO the legal right of Apple or AT&T to stop someone selling unlocking software will probably become a moot point, simply because if a company can do it, eventually some cracker somewhere will create a freely distributable version and release it onto p2p. Once that happens the only thing can Apple can do is update the firmware, which I would guess they have every right to do if they choose to.

In a nutshell, I think that allowing it to be unlocked would be beneficial to Apple's sales, but perhaps may cause (possible legal) problems in their relationship with AT&T.

Re:BBC is usually wrong about US law

[mstone]

If the history of iTunes is any guide, Apple will continue to roll out new measures that are strong enough to keep unlocking a niche issue, but won't waste time, money, and consumer goodwill by trying to lock the thing down completely. The geohot hack doesn't bother Apple or AT&T at all. Most people won't open their phone and start tinkering with the hardware. If somebody comes out with a pure-software hack that can be loaded and run with only a couple mouse clicks, Apple will probably take steps to make that harder. But in the long run, fighting to prevent hacks is a losing proposition, and Apple knows it.

The best way for Apple and AT&T to stop people from unlocking their phones is to develop software-as-a-service products that are only supported by the AT&T network. Maybe that means seamless integration between the AT&T network and the iTunes store, maybe it means streaming music & video that automagically syncs to your desktop computer's iTunes library, or maybe it means things none of us have even considered yet. Apple's whole business strategy revolves around the idea that people will pay for better quality, though.

If 'unlocking the iPhone' means 'keeping all the really good features of the iPhone and ditching the expensive suck factor of AT&T service', then unlocking will rule no matter what Apple and AT&T do. If 'unlocking the iPhone' means 'I ditched AT&T, but lost a bunch of cool features in the process', then only a handful of people will bother.

There are two main reasons Apple won't try to play the lock-in card.

First, Apple doesn't own enough of the cellphone market to have a 'lock' on anything. Their stated goal is to own 1% of the smartphone market by the end of 2008. Meanwhile, Nokia's goal is to own 40% of that same market. Apple isn't in a position to get pushy about anything right now. All that will do is alienate customers, and alienating customers doesn't help them increase their market share.

Second, Apple doesn't compete by locking out alternatives. It competes by offering the best package it can, and trusting consumers to think the package is worth the price.

Re:Heres what the BBC says:

[Aramgutang]

I find the following line from the article interesting:

Analysts believe Apple may still have time to modify the iPhone to tighten its locks before the phone is launched in Europe.

Since some European countries, such as Finland, do not allow the sale of phones that are locked to a provider, and many of the other countries have regulations that require operators to unlock the phones they sell on request, or after a certain (usually pretty short) amount of time, wouldn't Apple need to use the time they have to loosen rather than tighten their locks?