You might not have considered it, but unlocking your iPhone is a steeplechase of information technology, intellectual property and contract law. Failure to consider these issues could lead to big problems. If you are not careful, you could find yourself looking at RIAA-sized settlement demands or even criminal charges. Let’s take a look at the law:
In 1997, the Court of Appeals for the Federal Circuit ruled in Hewlett-Packard Co. v. Repeat-O-Type Stencil Mfg. Corp. Inc., 123 F.3d 1445 (Fed. Cir. 1997), that refilling a patented toner cartridge was not a violation of the seller’s patent, even if the seller specifically warned against such refilling. The Federal Circuit held that with the original sale was an implied license to exploit any patent right of the seller to further any reasonable use of the product sought by the purchaser. So you are looking good on the patent end of things.
In 2004, the Court of Appeals for the Sixth Circuit ruled in Lexmark International, Inc. v. Static Control Components, Inc., 387 F.3d 522 (6th Cir. 2004), that cracking software on a toner cartridge to circumvent the seller’s restriction on refilling the cartridge was not a violation of copyright or the Digital Millennium Copyright Act (DMCA). So you are probably okay on copyright.
According to Jennifer Granick, executive director of the Stanford Law School Center for Internet and Society, there is even a specific exemption in copyright law, that lasts until 2009, which allows you to circumvent technological measures controlling access to copyrighted works, like digital cell phone locks. Notwithstanding, Professor Granick feels hacking the iPhone to use a carrier other than AT&T may open you up to breach of contract claims for violation of the terms of service you signed with AT&T.
The good news is that penalties associated with breaching the AT&T agreement are not criminal and are far less than the potential damages associated with copyright, DMCA or patent infringement. The better news is that avoiding activation with AT&T would appear to put you in the clear with regard to any breach of contract claim by AT&T.
At least I only have 22 more months left on my AT&T contract . . . (sigh)