Understanding the legality of an unlocked smartphone

Posted by Trent Nouveau

Legal protection for individuals who unlocked their mobile phones for use on other networks officially expired last weekend.

As such, major US wireless carriers are now claiming that an unlocked phone purchased after January 26 (without a provider's permission) violates the Digital Millennium Copyright Act (“DMCA”) - whether the phone is under contract or not.

According to the folks at the Electronic Frontier Foundation (EFF), the current situation isn't as bad as it sounds, but could be even worse in some ways than most analysts believe.

"[Basically], the DMCA prohibits 'circumventing' digital locks that 'control access' to copyrighted works like movies, music, books, games, and software. It's a fantastically overbroad law that bans a lot of legal, useful, and important activities," EFF rep Mitch Stoltz explained.

"In what's supposed to be a safety valve, the U.S. Copyright Office and the Library of Congress have the power to create exemptions for important activities that would otherwise be banned by the DMCA. In 2012, we asked for - and won - exemptions for jailbreaking or rooting mobile phones to run unapproved software, and for using clips from DVDs and Internet video in noncommercial vids."

In addition, Consumers Union and several smaller wireless carriers requested an exemption for unlocking phones. The Copyright Office granted their exemption too - but sharply limited the window to just a few months. The good news, says Stoltz, is that the legal shield for jailbreaking and rooting a phone remains in effect - protecting the masses through 2015 and perhaps even beyond.

"Unfortunately, the shield for unlocking your phone is down, but carriers probably aren't going to start suing customers en masse, RIAA-style," he noted.

To be sure, despite a number of sensationalist headlines, the Copyright's office doesn't necessarily make the unlocking illegal, as the practice is actually a legal grey area under the DMCA.

"The law was supposed to protect creative works, but it's often been misused by electronics makers to block competition and kill markets for used goods," said Stoltz. "The courts have pushed back, ruling that the DMCA doesn't protect digital locks that keep digital devices from talking to each other when creative work isn't involved."

Of course, it is patently obvious that no creative work is actually involved here. In reality, wireless carriers aren't concerned with "piracy" of the software on their phones, but rather, they are quite worried about people re-selling subsidized phones at a profit.

While Stoltz doesn't believe there will be mass lawsuits anytime soon, he does caution that the threat still looms quite large, as both carriers and prosecutors will likely go after businesses that unlock and resell phones.

So if a court does rule in favor of the carriers, penalties are expected to be quite high, up to $2,500 per unlocked phone in a civil suit and $500,000 or five years in prison in a criminal case where the unlocking is done for commercial advantage. Worse, such a scenario could even happen with phones that are no longer under contract.

"Phones are, of course, the tip of the iceberg of problems the DMCA has created. It kills aftermarkets, interferes with legitimate research, and squelches creativity in new media. The exemptions created by the Copyright Office can be helpful but, as this episode shows, they are too narrow and too brief," Stoltz explained.

"They also turn a small, specialized federal office into a sort of Technology Regulation Bureau. It's absurd that this small group of copyright lawyers and librarians is tasked with making decisions about the future of electronics markets."

According to the EFF rep, the public can help influence the creation and defense of the next round of exemptions due in late 2014. Of course, the courts could also recognize the DMCA is being misused and decline to apply it to anticompetitive software locks.

"Ultimately, what we really need is to either fix the exemption process or reboot the anti-circumvention provisions of the DMCA, or both," added Stoltz.