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Mon, Sep 03, 2007 - Page 11 News List

Firms planning to unlock iPhone for money could face legal action

AP , NEW YORK

Apple customers Jason Payne, right, and Loan Thach, left, try out the new Apple iPhone at an Apple store in Palo Alto, California, on July 24.

PHOTO: AP

Hackers have figured out how to unleash Apple's iPhone from AT&T's cellular network, but people hoping to make money from the procedure may face legal problems.

At least one of the companies hoping to make money by unlocking iPhones said it is hesitating after calls from lawyers representing the phone company.

Unlocking the phone for one's own use, for instance to place calls with a different carrier, appears to be legal. But if it is done for financial gain, the legality is less certain.

"Whether people can make profits from software that hacks the iPhone is going to depend very much on exactly what was done to develop that software and what does that software do," said Bart Showalter, head of the Intellectual Property practice group at law firm Baker Botts in Dallas, Texas.

John McLaughlin of Uniquephones.com, an outfit based in Northern Ireland, said in a phone interview on Wednesday that its unlocking software for iPhones is ready, but the company is holding off while it gets legal advice.

He said it had been contacted by lawyers from O'Melveny & Myers LLP, an international law firm representing AT&T, who told him the software contained material copyrighted by Apple Inc.

"They don't have it, so therefore they can't actually threaten us," McLaughlin said. "It was `friendly advice.'"

AT&T spokesman Mark Siegel and Apple spokeswoman Jennifer Bowcock said their companies had nothing to say about the case.

Uniquephones.com had planned to release the software through iphoneunlocking.com. The price for people on its mailing list, which contained just less than 0.5 million addresses, would be US$25 per iPhone, McLaughlin said.

"From their e-mail addresses, they're from everywhere in the world," McLaughlin said. "Everybody is just waiting for it."

The iPhone is sold only in the US, and only for use on the AT&T network, but it is compatible with cellphone technology used around the world, which means an unlocked phone can use an overseas account and number. In the US, T-Mobile is the only other major carrier compatible with the iPhone; Sprint and Verizon Wireless use different network technologies.

Most US phones are locked to their carrier when sold, since the carrier subsidizes the cost of the phone. The iPhone, however, is apparently not subsidized by AT&T.

Some carriers provide the code to unlock a phone on request when a subscriber's contract expires, but that doesn't apply to the iPhone. In any case, the phone went on sale two months ago, while the minimum contract length is two years.

Another Web site, iphonesimfree.com, has said it plans to release iPhone-unlocking software in a few days.

The Copyright Office of the Library of Congress last year issued a statement that unlocking cellphones was not a violation of copyright under the Digital Millennium Copyright Act. That law has been used to go after software that copies DVDs.

But Tracfone Wireless LLC, a Florida-based company selling phones that use prepaid plans, won an injunction in February against a couple who bought its phones in large numbers and resold them unlocked.

The US District Court in Orlando found that the DMCA exception did not apply to those unlocking a phone with the intent to resell it.

Bruce Sunstein, a patent lawyer with Boston-based Bromberg & Sunstein, said unlocking software could well stand up to a legal challenge.

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