Federal Government to Apple: Jailbreak This iPhone

[Editor's note: As part of a major BNET redesign, Erik is moving to the new Wired In blog on the site. As of Thursday, you'll be able to find him here: http://www.bnet.com/blog/technology-business. You'll be able to find all our business-news blogs at our new home in the Commentary section here: http://www.bnet.com/news. Thanks in advance for your patience.] The federal government has effectively allowed iPhone apps that Apple (AAPL) hasn't approved. The result will be some interesting clashes, as Apple leans on developer agreements to keep control of the software ecosystems and consumer argue that running unapproved software is legal. The big question is whether this could further fuel investigations by the Federal Trade Commission and others into Apple's business practices.

Once every three years, the U.S. Copyright Office reviews the Digital Millennium Copyright Act for activities that should no longer be prohibited. The DMCA is what legally enforces digital rights management locks on DVDs, for example, Among other things, the Copyright Office has said that jailbreaking iPhones and other handsets is a consumer fair use. In other words, people are now allowed to crack the protection on an iPhone (and, who knows, maybe solve the reception and proximity sensor problems) and run whatever apps they wish, or even install another operating system:

"Apple is not concerned that the practice of jailbreaking will displace sales of its firmware or of iPhones," wrote the Register, explaining her thinking by running through the "four factors" of the fair use test. "Indeed, since one cannot engage in that practice unless one has acquired an iPhone, it would be difficult to make that argument. Rather, the harm that Apple fears is harm to its reputation. Apple is concerned that jailbreaking will breach the integrity of the iPhone's ecosystem. The Register concludes that such alleged adverse effects are not in the nature of the harm that the fourth fair use factor is intended to address."

And the Register concluded that a jailbroken phone used "fewer than 50 bytes of code out of more than 8 million bytes, or approximately 1/160,000 of the copyrighted work as a whole. Where the alleged infringement consists of the making of an unauthorized derivative work, and the only modifications are so de minimis, the fact that iPhone users are using almost the entire iPhone firmware for the purpose for which it was provided to them by Apple undermines the significance" of Apple's argument.

There are some other significant changes:

• People can circumvent copyright protection on DVDs to incorporate short clips of video for university courses, non-commercial videos, and documentary filmmaking. This will be a huge stone in the shoe of the movie and TV studios.
• People can legally crack the locks on cell phones they own to use them with other carriers. That will annoy AT&T (T), Verizon (VZ), and the like. Back to the iPhone example: imaging people taking their older iPhones and migrating to another carrier using GSM technology, like T-Mobile.
• E-books formats that keep people from using a read-aloud function or that tie the book to a given e-reader. That will pain a number of reader vendors -- for example, Amazon (AMZN), Apple, Sony (SNE), and Barnes & Noble (BKS) -- and all of the major publishers, who prefer to lock down titles as much as possible.

Jail cell image: bradleyjames, CC 2.0. Photo editing, Erik Sherman.