Phone unlockers versus the DMCA

A mobile phone company is arguing that companies that unlock their handsets violates the DMCA. They argue that the software on the phone is a copyrighted work, and the unlocker is breaking DRM in a way that violates the statutory prohibition on circumvention. Nice try — but the courts already rejected that theory when Lexmark tried to apply it to people who refilled printer cartridges (copyrighted printer cartridges! What chutzpah!)

Last week, I was contacted by a small company that I'll call Unlocko. Unlocko sells software that "unlocks" mobile phones so owners can select different cellular providers on the same handset. The company had received a cease-and-desist letter from a large mobile phone provider, which I'll call CellPhoneCo.

Like most U.S. cellular providers, CellPhoneCo electronically locks the handsets it sells so the phones can only be used with CellPhoneCo's service. CellPhoneCo claims that the sale of unlocking software is illegal.

The financial motive behind this claim is obvious. Companies have been using the razor blade business model to guarantee a steady stream of revenue ever since, well, the razor blade. Cell phone companies sell you a phone at a discount, and then make up the difference by requiring you to sign a multi-year contract promising to pay monthly fees for mobile phone service or to fork over a hefty termination penalty if you break the deal.