Columns Unlock Your Phone, Get 10 Years In Prison, Pay $1 Million

  1. Your right to unlock your cell phone has not only just expired but it has also become a crime punishable by up to 10 years in prison with up to a $1,000,000 fine. Do these extraordinarily harsh penalties seem more likely to be the product of an Internet hoax? If you have or want to unlock your phone, you'll want to become more familiar with Section 1204 of Public Law 105-304 of the Digital Millennium Copyright Act (DMCA), a nuclear weapon against consumer piracy.

    Criminal Penalties for Violation of the DMCA


    Two sections of the DMCA make it a crime to hack and defeat copyright protection mechanisms: Title 17 Chapter 12 Section 1201 Circumvention of Copyright Protection Systems and 1202 Integrity of copyright management information. The argument behind this law is that a copyright holder owns the exclusive rights to exploit the financial potential of a creative work. If defeating copy protection mechanisms was not made unlawful, the ability of rights holders to derive reasonable revenues would be thwarted. In practice, the argument goes something like this with some exceptions. If it was not unlawful to rip your Avatar DVD, such movies would be traded freely between consumers, the artists and businesses associated with such films would not have a market to sell them and would lose all incentive to make these costly blockbusters.

    The Difference Between Jailbreaking and Unlocking


    The same logic used to explain the need for copy protection mechanisms within DVD technologies can be applied to cell phone "jailbreaking" and "unlocking." While both concern the defeat of copyright protection mechanisms, jailbreaking is a term commonly used to refer the circumvention of a device's operating system in order to enable an experience beyond that provided by the manufacturer. For example, jailbreaking an iPhone may allow the user to customize what data may appear on the home screen beyond what Apple may allow. "Rooting" is a nearly equivalent term used to refer to Android-based mobile devices. Jailbreaking alone may not allow the phone to be used on different wireless carriers, which is the process of another step called "unlocking."

    Jailbreaking - but not unlocking - was originally made permissible thanks to an exception issued by the Librarian of Congress back in 2007. The rationale behind this legal exception is purely economic. A carrier needs to recoup costs associated with discounted hardware offered to consumers who purchase wireless services. The recovery comes from fees paid by the consumer, e.g. whose $649 phone is locked to a $199 two year service contract. The notion that it might be a crime to unlock an in-contract subsidized phone to sell at three times the cost should not be surprising. The CTIA describes the operation of mobile phone subsidies and its relationship to the challenges faced by the wireless industry.

    How Unlocking Your Cell Phone Became a Crime


    In July 2010, the EFF (Electronic Frontier Foundation) proclaimed three significant victories. The EFF won exemptions to the DMCA for "artists who remix videos", consumers who were able to successfully jailbreak or unlock their phone and the continued ability to use an unlocked cell phone on the network of choice. In October 2012, the U.S. Copyright Office and the Librarian of Congress decided to review the exceptions made to the DMCA, perhaps the result of vocal proponents such as the CTIA - The Wireless Association, which is an international nonprofit organization representing the wireless communications industry.

    The report of the Librarian of Congress concluded that consumers had an adequate ability to unlock their cell phones, either buy purchasing an unlocked cell phone separately in the marketplace (at full retail price) or as made available for purchase through wireless carriers. As a result, the exception to the DMCA that allowed unlocking cell phones should end since permitting consumers to continue this practice would cause significant harm the wireless phone industry. The amendment to the DMCA removing the cell phone exemption will be effective beginning January 26, 2013, which will apply regarding all phones purchased after (but not prior to) this date.

    Jailbreaking Your Tablet is Still Illegal


    The logic and consistency of some of these laws is certainly open to question but the issues involved are complex and not necessarily obvious on the surface. The theory behind why jailbreaking should warrant an exception to the rule of the DMCA is that modifications made by users are, for the most part, non-infringing in nature. (The full repercussions of jailbreaking extend far beyond the reach of this article so I'll decline from discussing them here.) As to the distinction made between smartphones and tablets, it seems to come down to lobbying and indecision. Opponents of extending a jailbreaking exemption to tablets cite (i) much greater costs to produce tablet-based software (especially games) which could be negatively impacted by jailbreaking; (ii) a wider adoption of smartphones over tablets existed at the time of the original exemption, so the carve out should be limited to the commonly acceptable practice involving smartphones; and (iii) the difficulty in being able to make a clear distinction between smartphones and tablets (e.g. the "phablet" - a large phone or small tablet with cell phone capabilities.) The conclusion reached in the Federal Register was that "the Register determined that the record lacked a sufficient basis to develop an appropriate definition for the “tablet” category of devices, a necessary predicate to extending the exemption beyond smartphones. In future rulemakings, as mobile computing technology evolves, such a definition might be more attainable, but on this record, the Register was unable to recommend the proposed expansion to tablets."

    Draconian Punishment for Unlocking Your Cell Phone


    Civil penalties for violating Section 1201 of the DMCA include a minimum of not less than $200 of statutory damages and greater than $2,500 for each individual act. Criminal penalties for a first offense, a felony crime, include paying a fine of up to $500,000 and spending up to five years in prison. A second offense doubles the punishment to up to $1 million and 10 years in prison. As to what constitutes "private financial gain, " it certainly seems that unlocking a cell phone to switch to another wireless carrier that offers lower prices would be included. Considering that the net gain of selling an unlocked iPhone is likely just a few hundred dollars, these penalties would seem grossly disproportionate to the crime.

    Contrast this punishment faced by the consumer who sells an unlocked iPhone with the penalties for committing another crime, such as a DUI that results in the death of a pedestrian. A person who commits vehicular homicide in Maryland "is guilty of a felony and on conviction is subject to imprisonment not exceeding 5 years or a fine not exceeding $5,000 or both." (Maryland Criminal Law Section 2-503) Not only is the penalty more severe for the seller of an unlocked cell phone, but one wonders how a fist time offender (now a felon) might crawl out from under a mere $200,000 fine which may be arbitrarily imposed.

    Cyrus R. Vance Jr., the New York County District Attorney, had the following to say in a recent New York Law Journal article article what and how much New York can do to fight white collar crime:

    But the utility of this basic anti-fraud statute is marred by its unconscionably low penalties for serious fraud. Whether a defendant obtains more than $1,000 or more than $1 billion as a result of the fraud, he still faces the same penalty, and can be convicted only of the lowest-level felony that New York recognizes.

    While the notion of breaking and entering being a crime should not come as a surprise, facing five years in prison and paying a $500,000 fine for an illicit $300 gain certainly should.
    Jurisdiction:
    • US Federal

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    Michael M. Wechsler

    Michael M. Wechsler
    Michael M. Wechsler is an experienced attorney, founder of TheLaw.com and of-counsel to Kaplan, Williams & Graffeo, LLC. He was also an SVP and chief Internet strategist at Zedge.net and legal consultant at Kroll Ontrack, a leading service e-discovery and computer forensics service provider.

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