©2016. Published in Landslide, Vol. 9, No. 2, November/December 2016, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
In October 2014, the Pew Research Center reported that 64 percent of American adults own a smartphone.1 This figure is nearly double the percentage reported just two years earlier in 2012. Approximately 29 percent of American adults also stated that their cell phone is “something they can’t imagine living without.”2 Given this, it is evident that mobile phones are increasingly becoming an indispensable part of daily life. However, as cell phones become more significant in daily life, there is a correlating demand for the law to accommodate such a change. In this context, this article discusses the Unlocking Technology Act of 2015, which was introduced in March 2015 and seeks to address the legality of unlocking cell phones and switching networks.3 In what some scholars call the “cell phone unlocking saga,” this bill has potential to either bring years of controversy to an end, or to reignite the question of whether consumers can legally unlock their cellular phones without legal repercussions under copyright law.
The following discussion contextualizes the proposed legislation by tracing the development of the cell phone unlocking debate since its inception. This review will show that there is an impending issue with regard to unlocking mobile phones and that the Unlocking Technology Act of 2015 attempts to ameliorate it. However, after considering several broader policy issues, it is apparent that this is still an “imperfect fit” for a broader telecommunications, copyright, and public policy issues.4
Rulemaking on Cell Phone Unlocking
A smartphone is a mobile phone that includes features such as wireless Internet and Bluetooth capability.5 Although there are various smartphones on the market, the most common smartphone is Apple’s iPhone, and it is mainly the center of discussion when it comes to jailbreaking phones. Apple released its first iPhone in the United States in 2007 and offered it through the wireless services of AT&T.6 Any consumer who wanted an iPhone had to sign an exclusive two-year agreement with AT&T in addition to Apple’s software licensing agreements, which had various prohibitions on modifying or reverse engineering the iPhone’s software. AT&T subsidized the initial cost of the phone to make it affordable to its users and then recouped that money over the two-year contract term.
As expected, many consumers tried to circumvent the contractual and technological measures taken to restrict their use of the iPhone. One way to “jailbreak” or “unlock” the iPhone was to modify Apple’s software to access programs and services unauthorized by Apple. The other method was to use “hardware-bypass” products. For instance, AT&T uses the Global System for Mobile Communications (GSM) standard, which requires a subscriber identity module (SIM) card to access its network. By including a SIM card with the devices, AT&T is able to monitor the devices on its network. Several tech-savvy users identified ways to bypass the SIM card requirement without modifying Apple’s software.7 Apple and other smartphone providers assert that it is simply “a cat and mouse game” of trying to stay ahead of the “unlockers.”8 The realistic assessment is that the issue has progressed since 2007 and the emerging markets for hacked smartphones undercut profits for the smartphone providers.
Cell phone unlocking mainly implicates the anticircumvention provisions of the Digital Millennium Copyright Act (DMCA).9 Congress enacted the DMCA in 1998 to bring the United States in compliance with international obligations as well as update copyright law amidst the technological advancement.10 Section 1201(a) of the DMCA prohibits anyone from circumventing technological measures utilized by copyright owners to protect their works.11 Aware that copyright law needed to keep abreast with technological advancement, Congress established a triennial rulemaking procedure where the Librarian of Congress has the authority to exempt certain classes of works from § 1201(a) on the advisement of the Register of Copyrights.12 In making its recommendation, the Librarian of Congress considers various factors to create exemptions for users of particular classes of copyrighted works who are likely to be adversely affected by § 1201(a) in their ability to make noninfringing uses of the work.13
The Librarian of Congress passed the first smartphone exception to § 1201(a) in 2006. The exception permitted circumvention for users of “[c]omputer programs in the form of firmware that enable [cell phones] to connect to [another] network . . . for the sole purpose of lawfully connecting to a wireless telephone communication network.”14 The evidence gathered clearly demonstrated that consumers who wished to switch networks had to either obtain access from their current provider or purchase a new phone.15 Because the major carriers use hardware such as SIM cards, consumers would not be able to switch their phone to a new network unless the old carrier released them from its network and the new one provided them with a new SIM card. At that time, the record showed that most networks did not give consumers access to switch networks, even if they had met all contractual obligations.16 It is necessary to note that the record has little representation of the cell phone industry’s interests.17 This is arguably because jailbreaking was not a major threat to the cell phone industry, considering the iPhone hadn’t even been released yet.
The Librarian of Congress revisited the exempted class in the next rulemaking session in 2009, which was much more contentious.18 The original proponents of the 2006 exemption sought to broaden it by including language that would permit commercial suppliers and servicers for unlocked cell phones. The major carriers countered that the proponents were improperly using the DMCA as a means of protecting their business practices, and because individual users were not the ones alleging any harm, the exemption was no longer necessary. Furthermore, developments in the marketplace since 2006 induced carriers to create alternative ways for customers to unlock their devices and switch networks. The cell phone industry also claimed that the use of technological measures on its cell phones to protect its software was the exact type of activity the DMCA sought to protect.19
Despite the objections, the Librarian of Congress renewed the exception with slightly different wording. The new wording used language that only permitted “the owner of the copy of the computer program” to initiate the circumvention.20 This wording acknowledges the fact that most consumers sign software licensing agreements when they purchase their phones, which makes them licensees as opposed to owners. Thus, it offered some protection to the phone industry by ensuring that consumers had to meet the contractual provisions to become the owner of the phone and be able to use the exemption.
The Librarian of Congress changed course in its 2012 rulemaking, which put the issue of cell phone unlocking at center stage. The Register of Copyrights reported that the mobile phone industry had evolved and that the market now offered more alternatives for consumers to obtain unlocked cell phones without circumventing any technological measures.21 Carriers had also become more lenient and willing to unlock phones for consumers.22 Additionally, opponents of the anticircumvention exemption were able to demonstrate that the majority of major cell phone carriers licensed the software in the mobile handsets.23 This, in conjunction with new case law developments over license vs. ownership of copyrighted works, led the Register of Copyrights to conclude the exemption was no longer needed.24 This persuaded the Librarian of Congress, who chose not to reinstate the previous exemption. Without an exemption permitting cell phone unlocking, many viewed unlocking as “illegal” because the cell phone industry technically could seek recourse under § 1201 of the DMCA.
Not surprisingly, the public did not respond lightly. Technology activist Sina Khanifar amassed over 114,000 signatures in a “We the People” petition to the White House, criticizing the Librarian of Congress’s recent decision.25 According to Khanifar, the decision would lead consumers to pay “exorbitant roaming fees” when abroad because they couldn’t switch to local networks for service.26 He also alleged the decision reduced the resale value of lawfully purchased handsets and, most importantly, hindered consumer choice. The White House not only agreed with Khanifar, but it sought to broaden his proposal by extending it to tablets. Accordingly, the White House urged Congress and the Federal Communications Commission (FCC) to take action.27
After the White House’s response, the National Telecommunications and Information Administration (NTIA) petitioned the FCC to implement a policy to unlock a wireless device upon a consumer’s request.28 It also asked the FCC to institute a rule that would override contractual limitations on unlocking devices.29 FCC Chairman Tom Wheeler then worked with the four major carriers, which voluntarily agreed to abide by various “unlocking principles.”30
On the legislative side, matters were more complicated. Senator Ron Wyden introduced the Wireless Device Independence Act of 2013. The proposal would permit a user to connect his or her mobile phone to another wireless network, provided that the user owned the computer program, the program was used solely for connecting to another network, and access to the new network was authorized.31 Around the same time, Senators Klobuchar, Lee, and Blumenthal introduced the Wireless Consumer Choice Act. This would require the FCC to direct mobile service providers to unlock wireless devices for subscribers.32
These two bills were potentially inconsistent with the United States’ international obligations, namely the Trans-Pacific Partnership Agreement (TPP) and the Korea-U.S. Free Trade Agreement (KORUS).33 KORUS clearly sets out permissible exceptions to the anticircumvention provisions, and cell phone unlocking is not one.34 Also, KORUS permits temporary rulemaking procedures such as the DMCA’s current provision, but it does not allow permanent ones. Most importantly, multiple policymakers, including Zoe Lofgren, Michael Froman, and Rick Boucher, expressed concerns on several occasions about the impact of a permanent fix on international obligations.35
To address this potential conflict with free trade agreements, Representatives Zoe Lofgren, Thomas Massie, Anna Eshoo, and Jared Polis introduced the Unlocking Technology Act of 2013. This bill passed off the compliance concerns to the president by directing him to “take the necessary steps to secure modifications to applicable bilateral and multilateral trade agreements.”36 However, the bill was broad in the sense that it sought to protect not only cell phone unlocking, but also any circumvention that was done for a use that was not copyright infringement.
Despite the ambitious attempts at reform, Congress passed the Unlocking Consumer Choice and Wireless Competition Act in 2014. Introduced by Bob Goodlatte, the legislation simply reinstated the exemption that the Librarian of Congress decided against in the most recent rulemaking.37 It should be noted that Representatives Lofgren and Chaffetz added an amendment that extended the exception to family members and individuals who act at the direction of the owner of the mobile phone.
The Unlocking Technology Act of 2015
Representative Lofgren’s recent bill is similar to the Unlocking Technology Act of 2013. The bill adds a subsection to § 117 titled “network switching,” which states that it is not copyright infringement to “copy or adapt the software or firmware of a user-purchased mobile communications device for the sole purpose of enabling the device to connect to a wireless communication network.”38 The subsection then limits the previous statement by requiring the copying or adapting to be initiated by the owner of the device, or an agent of the owner. The owner must also be in legal possession of the device, as well as have authorization to use the new network.39
Like the 2013 bill, Representative Lofgren’s proposed bill goes further than network switching. Namely, it attempts to address the alleged misuse of copyright law by copyright owners who use § 1201 to protect uncopyrighted parts of their work. Specifically, the bill adds a statement that it is not a violation of the anticircumvention provisions to circumvent a technological measure as long as the purpose is not to engage in a use that is copyright infringement. It also amends § 1201 to state that it is not a violation of the anticircumvention provisions for suppliers of products or services that are primarily used to facilitate noninfringing uses of works, provided that it is not the suppliers’ intent to infringe someone’s copyright.
The bill requires the assistant secretary for communications and information of the Department of Commerce to submit a report no later than nine months after the bill’s enactment. The report will assess the impact of the bill on “consumer choice, competition, and free flow of information,” advise whether § 1201 needs to be reformed or repealed in its entirety, and address any conflicts with international trade agreements and treaties.40 The bill also shifts responsibility on the president to ensure the United States is in compliance with international obligations, and if it isn’t, the bill directs the president to secure the necessary modifications.
Further Copyright Reform Is Necessary
Representative Lofgren’s bill is only a glimpse into the broader picture of imminent changes in copyright law. Current Register of Copyrights Maria Pallante presented on “The Next Great Copyright Act,” which outlined various issues that needed to be addressed by Congress to modernize copyright law.41 Congress has had several meetings regarding copyright law reform since her presentation, but no significant changes have been made. Compared to the multitude of issues on the table, this issue receives much more of a bipartisan approach. Considering this, it is reasonable to conclude that Congress is picking at the low hanging fruit to still claim that it is making progress in revising copyright law.
The Unlocking Technology Act of 2015 also does not address the rulemaking procedures under § 1201. Much of the controversy behind the Librarian of Congress’s recent rule change is the fact that they have the authority to make such decisions in the first place.42 Various commentators argue that this in itself is a reason for reform. Because § 1201 permits the Librarian of Congress to create classes rather than remove them, it is foreseeable that a similar conflict can arise with a different exception made by the Librarian of Congress.
At the heart of the unlocking issue, like most of copyright law, is the battle between copyright owners exerting too much control and consumers who want more liberty in using their products. This also includes the ability to innovate. For one, the legislation addresses the consumer demand for having the ability to switch networks with a mobile device and not be subject to penalty. As stated, the amended language to § 1201(a) is not specific to cell phone unlocking, and therefore it is a victory for consumers. Because it also allows for commercial suppliers and servicers of unlocked cell phones, it arguably also encourages innovation in the marketplace. From the perspective of the major carriers, content creators, and copyright owners, however, the heightened consumer freedom with smartphones deters them from creating the content in the first place. Thus, they can argue that the proposed legislation ultimately chills innovation.
This legislation can also change the business model for the major carriers. Currently, the major carriers subsidize smartphones and mobile devices to their customers in exchange for two-year service contracts. In the long run, they recoup the entire cost of the phone. The major carriers often charge early termination fees because it cuts into their projected profits. It therefore can be argued that the proposed legislation threatens the business model for the cell phone industry because consumers could claim protection under copyright law to unlock phones and switch networks.
The bill seems to be unnecessary because it will not affect the practices of the cell phone industry. This legislation does not affect contract law and therefore does not preclude the cell phone industry from using license agreements with its customers. As a result, consumers would still have to fulfill their contracts with their wireless providers in order to be owners of their mobile devices. More importantly, the marketplace has evolved to address most of the concerns that consumers have with the cell phone industry. For instance, T-Mobile and Sprint offer to cover the costs when users break contracts to switch to their network. T-Mobile also sells unsubsidized smartphones without requiring a new contract. Thus, if users are able to pay the full amount for a cell phone up front while maintaining their contract, the new bill would be beneficial for them because they’d be the owner of the mobile phone. The fact that the major carriers voluntarily agreed to unlocking principles further shows that a legislative solution may be unnecessary.
In the end, Representative Lofgren’s legislation is comparable to a band-aid, proposed as a temporary fix while ignoring the root of the problem. While it may make it clear to the public whether unlocking a cell phone is legal, it does not really address many of the underlying issues. There is still the looming issue of copyright law reform, and this bill is essentially compounding the problem rather than fixing it. Consumers will still have contractual obligations with their cell phone carriers as well. Thus, Representative Lofgren’s proposed bill appears to be a victory for the public on its face, but between the lines it is truly an “imperfect fit” for a much broader issue.
1. Mobile Technology Fact Sheet, Pew Res. Center (Oct. 2014), http://www.pewinternet.org/fact-sheets/mobile-technology-fact-sheet.
3. See Unlocking Technology Act of 2015, H.R. 1587, 114th Cong. (2015).
4. See R. David Edelman, It’s Time to Legalize Cell Phone Unlocking, We the People (Mar. 4, 2013), https://petitions.whitehouse.gov/response/its-time-legalize-cell-phone-unlocking (official White House response to petition to “Make Unlocking Cell Phones Legal”).
5. See Patrick J. Cleary, The Apple Cat and the Fanboy Mouse: Unlocking the Apple iPhone, 9 N.C. J.L. & Tech. 294, 296 (2008).
7. See id. at 298–300. It should be noted that this article is based on the assumption that jailbreaking is a violation of copyright law. Though this has not been decided by the judiciary, the Librarian of Congress adopted this position in 2009. See Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, 75 Fed. Reg. 43,825 (July 27, 2010) (to be codified at 37 C.F.R. pt. 201) [hereinafter 2009 Rulemaking].
8. Cleary, supra note 5, at 295.
9. 17 U.S.C. § 1201.
10. Specifically, the DMCA was implemented to bring the United States in compliance with the World Intellectual Property Organization (WIPO) Copyright Treaty and WIPO Performances and Phonograms Treaty. See Timothy K. Armstrong, The DMCA and the Cell Phone Unlocking Debate (Univ. of Cincinnati Coll. of Law Pub. Law & Legal Theory Research Paper Series No. 14-04, 2014), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2401013.
11. See 17 U.S.C. § 1201(a).
12. Id. § 1201(a)(1)(C).
13. Id. § 1201(a)(1)(C)(i)–(iv).
14. Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, 71 Fed. Reg. 68,472, 68,476 (Nov. 27, 2006) (to be codified at 37 C.F.R. pt. 201) [hereinafter 2006 Rulemaking].
17. In fact, the Register received unsolicited submissions from CTIA–The Wireless Association and TracFone Wireless long after the hearings had been conducted in the rulemaking procedure. For this reason, their comments were not considered. Id.
18. 2009 Rulemaking, supra note 7.
19. Id. at 43,830–32.
20. Id. at 43,830.
21. Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, 77 Fed. Reg. 65,260, 65,265 (Oct. 26, 2012) (to be codified at 37 C.F.R. pt. 201).
22. Id. at 65,266.
23. Id. at 65,265.
24. Id. at 65,265–66.
25. S.K., Make Unlocking Cell Phones Legal, We the People (Jan. 24, 2013), https://petitions.whitehouse.gov/petition/make-unlocking-cell-phones-legal.
27. Edelman, supra note 4.
28. Jonathan Band, The End of the Cell Phone Unlocking Saga? 7 (Aug. 7, 2014), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2483291.
30. Id. at 7–8.
31. Id. at 5.
35. Id. at 5 n.5, 6 n.7.
36. Id. at 6.
38. Unlocking Technology Act of 2015, H.R. 1587, 114th Cong. § 3 (2015).
40. Id. at § 2(b).
41. Maria A. Pallante, The Next Great Copyright Act, 36 Colum. J.L. & Arts 315 (2013).
42. See generally Mark Gray, New Rules for a New Decade: Improving the Copyright Office’s Anti-Circumvention Rulemakings, 29 Berkeley Tech. L.J. 759 (2014).