Apple iPhone Jailbreak and Copyright Decision Reaffirms Competition Principles

The U.S. Copryight Office announced yesterday amendments to anti-circumvention regulations pursuant to the Digital Millenium Copyright Act that would exempt "jailbreaking" the Apple iPhone from being illegal under federal law. The exemption was requested by the Electronic Frontier Foundation.

Here is an excerpt of the news release, which can be found at www.copyright.gov:

"The Librarian of Congress has announced the classes of works subject to the exemption from the prohibition against circumvention of technological measures that control access to copyrighted works. Persons making noninfringing uses of the following six classes of works will not be subject to the prohibition against circumventing access controls (17 U.S.C. § 1201(a)(1)) until the conclusion of the next rulemaking . . .

(2) Computer programs that enable wireless telephone handsets to execute software applications, where circumvention is accomplished for the sole purpose of enabling interoperability of such applications, when they have been lawfully obtained, with computer programs on the telephone handset.

(3) Computer programs, in the form of firmware or software, that enable used wireless telephone handsets to connect to a wireless telecommunications network, when circumvention is initiated by the owner of the copy of the computer program solely in order to connect to a wireless telecommunications network and access to the network is authorized by the operator of the network . . .

The Copyright Office is conducting this rulemaking proceeding mandated by the Digital Millennium Copyright Act, which provides that the Librarian of Congress may exempt certain classes of works from the prohibition against circumvention of technological measures that control access to copyrighted works."

Apple has proffered a number of reasons for preventing its customers from accessing applications, which basically can be summarized as Apple wanting to control the iPhone experience in the name of preventing the user experience from being degraded by unapproved vendors and apps that might not be available through the iTunes marketplace.

In general, from a business law perspective, this decision can be seen as of a piece with other legal restrictions that prevent a seller from trying to monopolize its customers. For example, in other settings, sellers in the past have tried to require customers as a warranty to maintain goods on a certain schedule using only the seller for services. This type of blatant restriction or tie-in generally is not permissible under antitrust and fair competetion laws. Instead, for example, rather than a car buyer having to use an auto dealer for onoging service, a purchaser should be free to choose independent shops and providers.

Similarly, although the Copyright Office's decision is rooted in intellectual property and copyright infringement considerations, it should be seen as an indication of suspicion of post-sale limitations on a purchaser's choices. Accordingly, business owners and managers should exercise care when contemplating legal ways to lock in or restrict their customers discretion after a sale.

Chicago business lawyer Jeremy A. Gibson is experienced in distribution & sales and intellectual proprty counseling would be pleaded to discuss your business law questions about the Apple iPhone jailbreaking case or similar post-sale requirements.