Apple May Be Breaking the Law With Policy On iPhone Unlocks

an anonymous reader writes "Apple's recent decision to void warranties for folks that unlocked their iPhones may wind them up in legal hot water. The site Phone News points out that Apple appears to have broken a key warranty law relevant to SIM unlocks. The Magnuson-Moss Warranty Act, a law decades old, would seem to prevent Apple from voiding warranties in the way it is threatening to do with the iPhone, or so the site argues. 'The Magnuson-Moss Warranty Act states that Apple cannot void a warranty for a product with third-party enhancements or modifications to their product. The only exception to this rule is if Apple can determine that the modification or enhancement is responsible [for] damaging the product in question ... The legal [questions are]: Is the SIM Unlock process that has become mainstream doing damage to iPhone? And, also, is Apple designing future software updates to do damage to iPhone when said SIM Unlock code is present?'"

Comments

Re:Why this is probably wrong

[PeterBrett]

Moreover, while end-user unlocking of handsets is legal in the US under the current DMCA exemption, the vendor is under NO OBLIGATION to support the phones in such a state with future software/firmware updates. I can hear all the "But what about the UK?" people chiming in now. Apple will do whatever is required by law in any jurisdiction. If a certain jurisdiction REQUIRES unlocked phones, Apple may skip that market entirely (for now). Even in the UK it isn't as clear as some people like to think it is, because the phone technically isn't subsidized, meaning that it may not have to be unlocked after the subsidy is repaid - because there is no subsidy. And a large part of Apple's iPhone strategy with carriers is tight integration for things like the activation process: things that simply aren't supported with anyone but the partner carrier.

I think you'll find that locking phones in the UK is only permitted because the carrier subsidises the cost of the phone.

Modchips?

[fishybell]

It's not illegal to unlock a phone because of an excemption in the DMCA, but the DMCA says nothing about requiring warranties remain invalid. If this law were used to force Apple into maintaining warranties on unlocked iPhones, then wouldn't Microsoft be also obliged to maintain warranties on 'chipped Xbox's. Right now they're merely banning them from Xbox live, but shouldn't the inability to get online with a product which heralds its online capabilities be a warranty issue?

Auto makers have been doing it for years

[steveo777]

Any car reseller, big or small, will tell you that installing 3rd party stuff in your car voids the warranty, and if you're not willing to fight, they'll walk all over you. Usually it's things like turbos and aftermarket brake systems, but sometimes they'll try to get away with little stuff. I have an aunt who had a new stereo installed to replace the factory tape deck (about 5 years ago) and when there was an ABS problem they tried to say that the CD player voided all warranties. Until I called them...

iPhones can probably play the same crap. As long as they warn you that 3rd party software or hardware may brick the system, they're fine. Nintendo just did that with Metroid Prime 3. There is a warning saying that upgrading the firmware will most likely brick machines with mods, and even gave instructions on how to circumvent the installation. You couldn't play the game, but at least you don't have a brick.

Re:Why this is probably wrong

[Applekid]

It's pretty well known that Apple gets a kickback of the charges collected by AT&T within the two year contract with an iPhone.

Jobs had a sink-the-company idea: AT&T!

[Futurepower(R)]

This entire problem occurred because Apple partnered with AT&T. It was a sink-the-company idea for Apple, in my opinion, guaranteed to get Apple some VERY bad press.

People have a legitimate need to use other SIM cards in their phones. For example, if you travel to Europe or Asia or South America, it is common to buy a SIM card there (GSM phones only) because then you get a local number, making it much cheaper for local people to call you and for you to call them.

Locking the iPhone while charging the full price for it was an attempt to squeeze more money from buyers, most of whom don't fully understand all the ways cellular phone companies, and now Apple, can abuse them, in my opinion.

AT&T is no longer the old AT&T, because the name was sold to SBC. My understanding is that the SBC trademark was worse than useless because the company is so abusive. So, the managers decided to use another name. Those interested in how that happened can watch Stephen Colbert explain in a 1 minute 14 second video: The New AT&T.

SBC taking the name AT&T is, in my opinion, a kind of legal fraud, but fraud nevertheless. People are bound to be confused and misled. AT&T had a very good reputation. SBC-AT&T is a completely different company, and has no connection in its culture with the old AT&T. At the very least, the SEC should require the company to disclose in the first sentence of any prospectus for its stock that there is no connection whatsoever.

Re:Huh?

[Winckle]

I think he means SIM unlocking in general, which is fairly mainstream in the UK. If a friend asks me whether he can give his phone to his mum or it needs unlocking he would certainly understand my reply.

Re:One more time: Warranty != Rights

[falcon5768]

If Apple knew, or should have known, that its firmware will destroy an iPhone regardless of after market modification, it *MUST* exercise care to prevent this from happening.

Nope. State and Federal courts are quite clear on the fact that the manufacturer is in no way obligate to support a item if the user manipulates said item so as it is not covered under the agreed to contract or warranty. Since hacking your phone to allow it to use other carriers SIM card both voids your AT&T contract AND your warranty with Apple, Apple legally has no obligation to support it at that point. And if your wondering how they came to know this courts wise, ask your local cable company. This is why its completely legal for them to burn out all the tuners in your house with a firmware upgrade to kick off people who are hacking the boxes to steal cable. A least in this case Apple isnt knowingly doing it unlike the cable companies who actually flat out broadcasted that you WILL get your equipment burned out if you put illegal stuff on their system.

Disagreement from Slashdot's Unofficial Law Dude

[Anonymous Coward]

The author is no doubt referring to 15 USC 2302(c): "No [company] may condition [a] ... warranty ... on the consumer's using ... an[] article or service ... which is identified by brand ... or corporate name; except ... if the [company can show] that the warranted product will function properly only if the ... service ... is used in connection with the warranted product."

What this literally means is that Apple's warranty cannot say "This warranty is void if you use the iPhone with a company other than AT&T." However, Apple's warranty doesn't say that. It says that the warranty is void if you mess with the firmware. It HAPPENS TO BE that the only way to make it POSSIBLE to use another company's service requires doing something else that will void your warranty, but the warranty terms themselves aren't anti-competitive, the firmware is.

Even if the terms of the warranty did say this, Apple is probably still safe because it wouldn't be hard to argue that the iPhone isn't "function[ing] properly" if Visual Voicemail is broken.

Any case brought under this law would be without merit and would probably be dismissed for failure to state a claim.

Why this _is_ wrong...

[msauve]

In the US, a warrantor can say the whole warranty is nullified for just about anything they can define. The only thing they need to do is state so in plain terms. Read the Magnuson-Moss Warranty Act, if you want to know.

Most of the "they can't do X" crap, stems from a misinterpretation of one specific part of the act:

No warrantor of a consumer product may condition his written or implied warranty of such product on the consumer's using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name; except that the prohibition of this subsection may be waived by the Commission if -
(1) the warrantor satisfies the Commission that the warranted product will function properly only if the article or service so identified is used in connection with the warranted product, and (2) the Commission finds that such a waiver is in the public interest.

The clause is to prevent, say, a vacuum cleaner company from requiring used of their own brand of bags (unless they provide them free). It doesn't mean you can modify your car for more horsepower, and expect the manufacturer to cover the engine under warranty when it breaks. It also doesn't mean a manufacturer can't put a clause in the warranty which says the car's warranty is voided if you hang fuzzy dice from the mirror. It means that they can't put a clause which says "Use of any brand fuzzy dice other than ACME brand fuzzy dice will void the engine warranty."

Specific to the case at hand, since Apple provides firmware "without charge" during the warranty period, Magnuson-Moss does not require that they allow third party or modified firmware to be used under the warranty terms, and Apple is within the law if they require that only their firmware be used to maintain a valid warranty.

Re:Why this is probably wrong

[djh101010]

Apple knows that the best course is to protect their exclusive contract, not to leave the phones as-is, and certainly not to shrug off people hacking their iPhones. Apple isn't doing this because they dislike their customers; they are doing it because they don't respect their customers.
No, Apple is "doing this" (I assume you mean, discouraging unlocking of iPhones) so AT&T doesn't have any reason to claim Apple is violating a contractual agreement. Could Apple make sure nobody can unlock the phones? Probably, yes. Have they done so? Nope. Just like every other time they've changed something to make some mega-corp happy, they make it so joe-user has to go out of their way, and that way Apple is covered. Want to copy a CD? Can't do it with drag & drop, sorry. Download a tool to do it? Well, it's not Apple's fault, they didn't give you the tool. Want to get around the DRM? You need to use a tool that isn't from Apple to do it. Want to unlock your iPhone? Same story. They can't just give you a way to do it, or they'd be in trouble with AT&T's lawyers. But, if they put up a token effort to keep people from doing it, and someone smart bypasses that (my bet is at 2 hours after the release being the time to workaround), well, (shrug) we tried, AT&T, I guess they're just too smart.

They also happen to be thwarting attempts to sync iPods with software other than iTunes -- I suppose this is also a completely normal, acceptable practice, to prevent people who use Amarok or Rhythmbox from syncing up their iPod?
I don't disagree that a recent update broke that function. I don't think we agree on why the change was made though. And, how long did it stay broken? If Apple really wanted to lock people out, I'm pretty sure they could have. The fact that they haven't tells me something.

Maybe they didn't tell their developers to find a way to cause hacked iPhones to stop functioning. But I doubt that when one of their developers said at a meeting, "...and this update will cause unlocked iPhones to stop functioning..." they thought anything other than, "Good!" Yup, "Good"...followed by a chuckle, and a thought of "That'll keep AT&T off our ass, and the mods community will have it licked in an hour or three".

Re:Software/Firmware != Hardware

[SIIHP]

"Chevy won't fix the *engine*, but if the differential burns out they'll sure as hell fix that."

No they won't. The diff operation is changed by the different engine you installed, and will not be covered. Saying so doesn't change that, it just makes you wrong.

And the rest of your post is wrong too.

Forgot one thing

[homer_ca]

There are exceptions to the rule on sales tie-ins. Described here

Although tie-in sales provisions generally are not allowed, you can include such a provision in your warranty if you can demonstrate to the satisfaction of the FTC that your product will not work properly without a specified item or service. If you believe that this is the case, you should contact the warranty staff of the FTC's Bureau of Consumer Protection for information on how to apply for a waiver of the tie-in sales prohibition.

Re:Why this is probably wrong

[SuperKendall]

The hash is easy to explain - basically a checksum to ensure the file it references is valid and still the same file as it is expecting. Don't forget that new iPods are a lot more easygoing about being disconnected in the middle of a sync. It's also a good way to be sure that the file properly downloaded from the iTunes store over a spottier wireless connection.

I think you are asking why the hash is encrypted, which has less reason for being so though I could easily wave hands a bit and say it's a light form of security that makes it harder for malware to infect and affect an iPod. So it's not like there's no valid technical reason even for that, it's just more dubious as far as value added. But the other poster makes a great point, they could have easily engineered a far tougher nut to crack so the truth must not be as dire as you are making it out to be.

Re:FUCK YOU MOD

[TheVelvetFlamebait]

Obviously the kind that realises that just because they may be wrong about one thing, doesn't mean that everything else they say is wrong because of it.

In regard to your whinging about the troll mod, let me say that troll mods have nothing to do with truth, or logic. If you put your opinion in an inflammatory or obstructive way, no matter how logical or truthful you may think it is, you run the risk of legitimately getting a troll mod. That last "and the rest of your comment was wrong" line was especially obstructive. How are you meant to discuss the topics at hand if everyone just said "you are completely wrong" and provided little to no evidence why.

Re:Why this is probably wrong

[garyrich]

Unofficially, they will know perfectly well what it will do. If there are two roughly equal ways to implement a desired feature and and they know one of them breaks on the hacked phone -- that is the one that will be used. Apple would reverse engineer an unrelated reason for why they picked that implementation.

How do you know? Seriously? How do you know?,.

Simply because I've seen it done many many times. It's standard business practice. Heck, I've seen just Microsoft do it a dozen times. I can think of a dozen times between DOS 3.2 and Windows 3.1/DOS 5. I've seen pharmaceutical companies intentionally sabotage generic competition with this tactic.

What they do have is a contract with AT&T to ensure and protect their exclusive carrier rights. If they don't do everything legally possible to make sure people can't switch carriers - they will sure Apple for everything they can.

I'm absolutely positive that AT&T's lawsuit would fail if they tried to sue Apple for not bricking hacked iPhones. No judge would prosecute that. Of course, that is assuming AT&T would themselves recognise that not bricking the hacked iPhone constitutes breach of contract. It's only obvious now that the update is actually going to brick the iPhone.

Of course the suit you mention would fail. They wouldn't sue for that. They would sue claiming that Apple did not exercise due diligence in protecting their exclusivity. Doesn't even really matter if they win, the goal is to tie Apple up in court and squeeze concessions out of them to settle.