IPhone Hackers Could Face Legal Battle

George Hotz, 17, talks about an iPhone that he has unlocked and is using on T-Mobile's network, in this Aug. 24, 2007 file photo in New York. Hackers have figured out how to unleash Apple's vaunted iPhone from the AT&T network, but experts say people hoping to make cash out of the procedure may face legal problems. (AP Photo/Jeff Christensen, file) (Jeff Christensen - AP)

NEW YORK -- Hackers have figured out how to unleash Apple's iPhone from AT&T's cellular network, but people hoping to make money from the procedure could face legal problems.

At least one of the companies hoping to make money by unlocking iPhones said it is hesitating after calls from lawyers representing the phone company.

Unlocking the phone for one's own use, for instance to place calls with a different carrier, appears to be legal. But if it's done for financial gain, the legality is less certain.

"Whether people can make profits from software that hacks the iPhone is going to depend very much on exactly what was done to develop that software and what does that software do," said Bart Showalter, head of the Intellectual Property practice group at law firm Baker Botts in Dallas.

John McLaughlin of Uniquephones.com, an outfit based in Northern Ireland, said in a phone interview Wednesday that its unlocking software for iPhones is ready, but the company is holding off while it gets legal advice.

He said it had been contacted by lawyers from O'Melveny & Myers LLP, an international law firm representing AT&T, who told him the software contained material copyrighted by Apple Inc.

"They don't have it, so therefore they can't actually threaten us," McLaughlin said. "It was 'friendly advice.'"

AT&T spokesman Mark Siegel and Apple spokeswoman Jennifer Bowcock said their companies had nothing to say about the case.

Uniquephones.com had planned to release the software via iphoneunlocking.com. The price for people on its mailing list, which contained just fewer than half a million addresses, would be $25 per iPhone, McLaughlin said.

"From their e-mail addresses, they're from everywhere in the world," McLaughlin said. "Everybody is just waiting for it."

The iPhone is sold only in the U.S., and only for use on the AT&T network, but it is compatible with cell phone technology used around the world, which means an unlocked phone can use an overseas account and number. In the U.S., T-Mobile is the only other major carrier compatible with the iPhone; Sprint and Verizon Wireless use different network technologies.

Most U.S. phones are locked to their carrier when sold, because the carrier subsidizes the cost of the phone. The iPhone, however, is apparently not subsidized by AT&T.