Hackers Scoff At iPhone Warning

After issuing a thinly veiled threat this week to customers who had the audacity to unlock their iPhones, Apple could soon be dealing with much more troublesome issues than the predictable backlash it’s already receiving from rogue hackers and Apple fans alike.

Industry pundits, angry customers and loophole-seeking attorneys are now weighing in with their take on Apple’s unambiguous response to what’s become something of a cottage industry for hackers and customers who want to unlock their iPhones for use on wireless networks other than AT&T’s.

In a statement released Monday, Apple admonished that “unauthorized iPhone unlocking programs available on the Internet cause irreparable damage to the iPhone’s software which will likely result in the modified iPhone becoming permanently inoperable when a future Apple-supplied iPhone software update is installed.”

It also said users who unlocked their iPhones have violated the terms of their software license agreement and, therefore, had voided their warranty.

Apple’s solution—undoubtedly required by virtue of its contract with AT&T—didn’t thrill customers who paid as much as $599 for their iPhones and then unlocked them to use non-AT&T wireless networks.

Now they face the “likely” prospect of their iPhones becoming “permanently inoperable” when a future software version is installed. And once their iPhones are disabled, they won’t be able to return them to Apple and AT&T for a refund or a replacement.

Apple’s position has left iPhone customers, locked or unlocked, asking themselves the same question: Can they really do that?

“In my opinion, if future software upgrades are withheld then there might some legal actions by consumers if, at the time of the purchase of the iPhone, there was no disclaimer in place stating the policy,” Terry Daidone, co-founder of CertiCell, a Louisville, Ky.-based mobile phone repair company, wrote in an e-mail to InternetNews.com.

“I have to say that this is not unlike Hewlett Packard or other OEM’s who will void the warranty of their printers or hardware if non-OEM supplies are used. Rarely do the follow through with the scare tactics they publish,” he added.

Daidone has more than a passing interesting in Warranty Gate. He’s the guy who gave New Jersey teenager George Hotz a Nissan 350Z, three brand new iPhones and a paid consulting job with his company in exchange for two unlocked iPhones reconfigured by the resourceful hacker.

For the record, Daidone said he’s still “proud” of the deal he cut with Hotz and is quick to point out the company has no plans to remain in the business of unlocking iPhones.

But whether Daidone and other iPhone customers claiming foul will have any recourse once Apple starts updating the software and voiding warranties will almost certainly be determined by a court of law.

Irate customers who have unlocked their iPhones—or possibly just want to support the position of those who have—flooded online message boards Wednesday, arguing the Magnuson-Moss Warranty Act, a federal law enacted in 1975 and a precursor to what are now widely referred to as “Lemon Laws” at the state level, validates the warranty iPhone owners hold because manufacturers cannot void a warranty for a product with third-party enhancements or modifications to their products.

This caveat was intended to prevent car manufacturers from voiding warranties on their cars after customers used third-party supplies to change the spark plugs or replace a radiator.

But at least one attorney thinks folks with unlocked iPhones are going to need something more substantial than a rather liberal interpretation of the Lemon Law.

“Once a person modifies the product, Apple is under no obligation at all,” said T. Michael Flynn, an attorney based in Carrollton, Ga. who is familiar with the particulars of the Magnuson-Moss Act. “I believe Apple has the resources and the standing to maintain its position on the warranty. To me, it’s like abusing the product. It wasn’t designed to be unlocked so I don’t think there’s much of a case there.”

Apple representatives were unavailable for comment on the backlash or defend their position on the warranties.

While the iPhone firmware Apple intends to upgrade is protected by the Digital Millennium Copyright Act of 1998, the Copyright Office issued an exemption last year that allows consumers to unlock their cell phones “for the sole purpose of lawfully connecting to a wireless network.”

That means individual you can legally unlock your iPhone but you can’t sell an unlocked iPhone or sell the software used to unlock iPhone without violating the DCMA.

The details and legal implications weren’t terribly important to the vast majority of people posting their thoughts on Slashdot Wednesday.

“Morality leaves the equation when a billion-dollar corporation is on the other end of the transaction,” wrote someone using the moniker “DustyShadow. “Apple is the one not playing fair here. Not the iPhone owners.”

“Poor Apple. People are buying things from them and then using them in ways that Apple hadn’t intended,” wrote “schon.” “I mean God forbid that someone would buy something and then not expect the vendor to have complete and utter control over it! What is this world coming to?”

Others disagreed.

“I think the unlocked iPhone owners are the ones not playing fair,” wrote “cyberworm.” “They knowingly took the risk of bricking their iPhones when they unlocked them. They knew (or should have known) that the potential for the iPhone to become unusable in the future existed.”

For now, Apple seems to have the upper hand in its battle with hackers and those holding unlocked iPhones.

But it’s probably fleeting.

“It would be quite easy for Apple to lock updates so that owners of contract-breaching unlocked phones would not be able to update them,” Robert Graham, CEO of Errata Security, wrote in an e-mail to InternetNews.com. “Except hackers are likely to hack the updates so that they can be applied. Whatever Apple does to lock phones can be unlocked by hackers.”

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