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DMCA Exemption Attorney Weighs in on iPhone Unlocking

Wednesday, August 29th, 2007 at 1:35 PM - by

The attorney who won the exemption to the DMCA for her clients to unlock a mobile phone has weighed in on the iPhone unlocking issue. The exemption doesn't offer blanket protection for mobile phone unlocking and doesn't apply to those offering unlocking services to others, according to Jennifer Granick on Wednesday.

Writing for Wired, Ms. Granick won the exemption in November that allows customers to circumvent digital locks on phones.

However, Ms. Granick pointed out that the exemption is weak. "...the exemption does not offer blanket protection for phone unlocking, though the practice might be legal for other reasons. The problem is that the exemption protects unlockers, but it doesn't apply to those entities that distribute unlocking tools or provide unlocking services to others. Even when the Copyright Office grants exemptions for non-infringing or fair uses, customers usually still suffer because in most cases, including unlocking, only the small number of persons who have the technical know-how to circumvent can do so....

"Individuals or companies that might help them are still prohibited from doing so. Thus, in many ways, the rule-making is an empty promise: giving a legal right to circumvent, without protecting access to the tools necessary to make that right a reality," she wrote.

Another issue is the Terms of Service (TOS) from AT&T. AT&T has a legal argument that the phone may not be operated on another network by the TOS -- assuming the customer has activated their iPhone.

Ms. Granick expressed the hope that this furor will change the future of mobile phones: "Perhaps the iPhone will awaken a consumer revolution, though not necessarily the one envisioned by Apple or AT&T."

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daemon said:

member since 17 May 2007 with 309 posts, unranked, send him a message or view his profile

Wed Aug 29, 2007 1:58 pm

Talk about irony if the iPhone does revolutionize the cell phone industry in this way.

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A guest said: (hide)

Wed Aug 29, 2007 2:27 pm

One of the companies claiming to be able to unlock the phone is UK based. How can the DMCA apply to this company? The attorneys should be talking about international laws instead of imagining that everything happens in the USA.

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A guest said: (hide)

Wed Aug 29, 2007 2:43 pm

Since U.S. courts have personal jurisdiction of companies that do business in the U.S., a U.S. district court judge could order all U.S. websites and ISP to not host the infringing companies websites and could order all U.S. financial institutions (e.g., Visa, MasterCard, American Express, Banks, etc.) to not make payments to the infringing companies. The judge could order seizure of any other assets that those companies had on U.S. territory or that was in the custody of U.S. persons. And under international principles of comity, the judgement of the U.S. court for damages would be enforceable in foreign courts, at least in so far as it related to acts that are violations of U.S. law and which occurred on U.S. territory. And transacting sales in the U.S. or distributing software to persons in the U.S. is deemed to take place in the U.S., no matter where the servers are located.

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A guest said: (hide)

Wed Aug 29, 2007 3:30 pm

Guest wrote:
Since U.S. courts have personal jurisdiction of companies that do business in the U.S., a U.S. district court judge could order all U.S. websites and ISP to not host the infringing companies websites and could order all U.S. financial institutions (e.g., Visa, MasterCard, American Express, Banks, etc.) to not make payments to the infringing companies. The judge could order seizure of any other assets that those companies had on U.S. territory or that was in the custody of U.S. persons. And under international principles of comity, the judgement of the U.S. court for damages would be enforceable in foreign courts, at least in so far as it related to acts that are violations of U.S. law and which occurred on U.S. territory. And transacting sales in the U.S. or distributing software to persons in the U.S. is deemed to take place in the U.S., no matter where the servers are located.

So if a UK citizen used this software in the UK?

What if a US citizen used the software while visiting the UK (or any other country)?

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A guest said: (hide)

Wed Aug 29, 2007 6:42 pm

A UK citizen, who acquired his unlocking software and iPhone in the UK, might not be subject to the jurisdiction of U.S. courts. Foreign jurisdiction is legally complex. But a UK citizen is normally subject to UK law for his actions in the UK. However, there are international conventions covering intellectual property (IP) law, and those conventions could allow Apple and/or AT&T to protect their IP in foreign courts. So even for providing unlocking services and products in the UK, a company that infringes on the iPhone's IP could be subject to a lawsuit for infringement. All of the european countries where Apple intends to sell the iPhone are signatories to international conventions.

A UK citizen who acquires an iPhone in the U.S. without having residency in the U.S., has, to begin with, probably committed fraud under the the AT&T terms-of-service contract (TOS) and would be operating and modifying the iPhone's software without either AT&T or Apple's permission. So that UK citizen would liable for possible infringement, possible violation of the DMCA, breach of contract, and fraud. Loading unlocking software in the UK that was from a UK company on that U.S. acquired iPhone probably results in liability for infringement and violation of the DMCA. Whether U.S. or UK courts would have jurisdiction of the case is a nice legal question. AT&T would argue that jurisdiction lies in U.S. courts because the UK citizen purchased the iPhone in the U.S. and committed predicate illegal acts in the U.S. The UK citizen would stand on his citizenship and that merely purchasing the iPhone was not, or should not be deemed, illegal, and that the issue of the illegality arising from loading UK unlocking software on his iPhone, while he was and is in the UK, should be determined in UK courts under UK and applicable EU law, since UK courts have personal and subject matter jurisdiction under. It may simply come down to the doctrine that Plaintiff usually has its choice of forums where more than one forum would potentially have jurisdiction, and the first court to properly have jurisdiction will decide the matter. Or it may come down to a judge of the High Court deciding that UK court is a more appropriate forum for the case rather than transfer it to a U.S. court. This question involves complex questions regarding jurisdiction, choice of laws doctrines, and treaties, and since you are getting this off the cuff opinion for free, adjust your expectations accordingly.

A U.S. citizen who acquires his iPhone and unlocking software in the U.S. is subject to the jurisdiction of U.S. courts. A U.S. citizen who legally acquires his iPhone and unlocking software in a foreign country is probably subject to the jurisdiction of that country's courts. A U.S. citizen who acquires his iPhone in the U.S., but acquires and installs his unlocking software abroad and who resides abroad is probably within the jurisdiction of U.S. courts, because he is a U.S. citizen and purchased his iPhone in the U.S., ut remember the U.S. citizen would most likely be sued for breach of contract, though an action for infringement may lie, depending on TOS. The issues here involve complex questions of federal subject matter and personal jurisdiction, so my off the cuff answer is provisional at best.

However, as a practical matter, AT&T probably won't sue individuals, because that is inefficient and bad public relations. AT&T will focus its fire on the companies that provide unlocking software and services. Suing individuals is only a last resort in the event that it fails in its suits against the companies that unlock the iPhone.

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A guest said: (hide)

Wed Aug 29, 2007 9:26 pm

You guys are all full of S**t.

The consumer pays FULL RETAIL PRICE for the iPhone and thus OWNS the iPhone, regardless of the Terms of Service. If the consumer activates, then CANCELS the AT&T service within the allowed time frame, there is absolutely ZERO liability to AT&T's terms of service. Period. If the consumer then unlocks the iPhone from AT&T and legally activates this valid phone onto another network, there is nothing anyone can do to prevent that. Nothing. It is a legally purchased phone with an unlocked SIM activated LEGALLY onto another network which the consumer is paying for cell phone and data access. There is no theft of services and the hardware is a legally valid cell phone device.

So, if I as a consumer wants to pay for software that helps me unlock my phone (which I am legally permitted to do), then there isn't anything to prevent me from doing so. If you think that the unlock software company can't offer that service for sale, then that is your opinion. However, it is totally legal in European countries to unlock cell phones. So, if the software is offered for sale in Europe and you buy it to help you unlock your phone, there is nothing illegal or anything that AT&T can do about it.

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gslusher said:

member since 13 Nov 2002 with 2063 posts, unranked, send him a message or view his profile

Wed Aug 29, 2007 9:52 pm

Anonymous wrote:
You guys are all full of S**t.

The consumer pays FULL RETAIL PRICE for the iPhone and thus OWNS the iPhone, regardless of the Terms of Service. If the consumer activates, then CANCELS the AT&T service within the allowed time frame, there is absolutely ZERO liability to AT&T's terms of service. Period. If the consumer then unlocks the iPhone from AT&T and legally activates this valid phone onto another network, there is nothing anyone can do to prevent that. Nothing. It is a legally purchased phone with an unlocked SIM activated LEGALLY onto another network which the consumer is paying for cell phone and data access. There is no theft of services and the hardware is a legally valid cell phone device.

So, if I as a consumer wants to pay for software that helps me unlock my phone (which I am legally permitted to do), then there isn't anything to prevent me from doing so. If you think that the unlock software company can't offer that service for sale, then that is your opinion. However, it is totally legal in European countries to unlock cell phones. So, if the software is offered for sale in Europe and you buy it to help you unlock your phone, there is nothing illegal or anything that AT&T can do about it.

Perhaps you could tell us where you got your law degree and in which jurisdiction you're licensed to practice. (I doubt that you have such a degree or license, especially since you seem to be ignorant of what "ownership" means in regards to a device that requires software to operate. One may own the device, but may actually only be licensed to USE, rather than "own," the software.)

Have you read the activation agreement and terms of service? If not, how do you know what the documents say? You're making a lot of assumptions with no evidence.

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A guest said: (hide)

Thu Aug 30, 2007 4:05 am

I'm the first guest, not the angry one.

Thank you for your answers (probably a lawyer) guest. You seem to be the only person who has tried to actually give a reasoned opinion based on what I assume to be correct US law. It interesting, and to some extent worrying, the extent to which the US claims of jurisdiction seem to reach foreign citizens acting legally in their own country. I would expect Apple and O2(?) to restrict unlocking as part of the contract for the iPhone in the UK; the phone is not actually purchased so the user has no right to modify it.

There are yet more possible variations of who purchases what, owns what and what laws apply. For example what if a US citizen purchases the iPhone in the UK (not in the US), what if the UK citizen purchases the iPhone from an individual (over ebay) from the US without entering any contract with AT&T and so on.

I'm sure that there will be much lawyer fun in the next six months.

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daemon said:

member since 17 May 2007 with 309 posts, unranked, send him a message or view his profile

Thu Aug 30, 2007 1:14 pm

Guest wrote:
I'm the first guest, not the angry one.

Thank you for your answers (probably a lawyer) guest. You seem to be the only person who has tried to actually give a reasoned opinion based on what I assume to be correct US law. It interesting, and to some extent worrying, the extent to which the US claims of jurisdiction seem to reach foreign citizens acting legally in their own country. I would expect Apple and O2(?) to restrict unlocking as part of the contract for the iPhone in the UK; the phone is not actually purchased so the user has no right to modify it.

I wouldn't put too much faith in his opinion. His arguement is solely from the stand point that the software cannot be altered in any way, shape, or form under copyright law. He also contends that by merely purchasing the iPhone you have a contract of adhesion with AT&T. He ignores the fact that contracts of adhesion are illegal in many states and juristictions, and even in states and juristictions that it is legal, the contract can be nullified as unconscientious dealings. His entire arguement is to reinforce the idea that the consumer has no right to choose his carrier, and he's using copyright laws to do this.

In summation, he is trying to use the copyright laws to justify enforcement of practices beyond the scope and intention of the copyright laws.

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A guest said: (hide)

Thu Aug 30, 2007 5:07 pm

Dear Interlocutors: I presented some off the cuff hypothetical examples of how either Apple or AT&T might enforce their rights to prevent unlocking the iPhone in foreign jurisdictions. As noted by the civil and not angry guest, the combinations and permutations are far to many to exhaust even in a treatise-length post. The bottom line is this: Intellectual property (IP) laws and/or U.S. civil law have extra-territorial reach either because of treaties, and/or because of U.S. Supreme Court precedent that extends the reach of U.S. courts' personal jurisdiction to persons who either commit wrongful acts in the U.S. or who sale or distribute goods and services in the U.S. And in the case of treaties, Apple and/or AT&T can go to foreign courts to enforce, at least, their IP rights in foreign countries. Treaty obligations and/or the principle of comity (mutual respect for lawfully rendered judgments of a foreign court) also means that foreign courts will respect and enforce the judgments of U.S. court where U.S. courts properly have jurisdiction and those judgments do not conflict with their own domestic law and their domestic policies, as set forth in their laws.

Now, I do not minimize the difficulty of enforcing exclusive agreement in Europe, where the attitude to agreements of the type that exist between Apple and AT&T and AT&T and its iPhone customers range from grudging tolerance to flat prohibition. However, even in hostile jurisdictions, such as Norway and France, it will difficult for even those countries to ignore Apple's IP rights in a manner that is consistent with their treaty obligations and that preserves their interest in protecting the IP of their authors, inventors, and companies. Thus, terms of service agreements (TOS) that restrict how customers and others use the iPhone's IP are at least valid in most european jurisdictions, unless and until those jurisdictions change their laws, which could happen.

Finally, the doctrine of an adhesion contract will not provide a viable defense. "A contract of adhesion is: a contract (often a signed form) so imbalanced in favor of one party over the other that there is a strong implication it was not freely bargained. Example: a rich landlord dealing with a poor tenant who has no choice and must accept all terms of a lease, no matter how restrictive or burdensome, since the tenant cannot afford to move. An adhesion contract can give the little guy the opportunity to claim in court that the contract with the big shot is invalid." The problem for american courts is that every contract involves some coercion and some imbalance in bargaining power. Deciding was constitutes an impermissible imbalance in bargaining power or an impermissible coercion becomes arbitrary, unless a court can define what constitute an impermissible imbalance of power. As a consequence, american courts have so narrowed the scope of adhesion contracts that a contract of adhesion will not be found unless necessity forces a person to enter into a contract where he has no meaningful choices. It is sometimes said that the circumstances of the bargain so favor one party that no one who had a choice would have entered into the contract. It will be hard enough to argue to any court that an iPhone is a necessity, but even if your persuade the court on that point, the vast choices of smartphones and other types of cell phones would defeat any argument that you had no choice but to accept AT&T's TOS for the iPhone.

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daemon said:

member since 17 May 2007 with 309 posts, unranked, send him a message or view his profile

Thu Aug 30, 2007 6:25 pm

Guest wrote:
Finally, the doctrine of an adhesion contract will not provide a viable defense. "A contract of adhesion is: a contract (often a signed form) so imbalanced in favor of one party over the other that there is a strong implication it was not freely bargained. Example: a rich landlord dealing with a poor tenant who has no choice and must accept all terms of a lease, no matter how restrictive or burdensome, since the tenant cannot afford to move. An adhesion contract can give the little guy the opportunity to claim in court that the contract with the big shot is invalid." The problem for american courts is that every contract involves some coercion and some imbalance in bargaining power. Deciding was constitutes an impermissible imbalance in bargaining power or an impermissible coercion becomes arbitrary, unless a court can define what constitute an impermissible imbalance of power. As a consequence, american courts have so narrowed the scope of adhesion contracts that a contract of adhesion will not be found unless necessity forces a person to enter into a contract where he has no meaningful choices. It is sometimes said that the circumstances of the bargain so favor one party that no one who had a choice would have entered into the contract. It will be hard enough to argue to any court that an iPhone is a necessity, but even if your persuade the court on that point, the vast choices of smartphones and other types of cell phones would defeat any argument that you had no choice but to accept AT&T's TOS for the iPhone.

I think your requirement that it is necessary to prove that the iPhone is a necessity to prove that the terms of service is a contract of adhesion is not likely to be valid. The main requirement is to prove that there was no other recourse, and as you are saying the terms of service are binding as soon as you purchase the iPhone (which I do not concede as being true, I am of the opinion the terms of service are put into force only when you agree to a monthly service plan through AT&T, and that the terms of service provide a reasonable avenue of exiting from the agreement through cancelation of the service within the first month without penalty and an option to cancel the service any time after the first month during the two years at a penalty of $175, once one of the options are exercised I do not believe the terms of service have any additional binding as they are broken with the ending of the service, eg. without service there can be no terms of service) and you have no other recourse than to accept the terms of service as soon as the iPhone becomes your property, than in my opinion it meets the definition of being a contract of adhesion.

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