Is jailbreaking iPhones a business opportunity?

The U.S. government this week decided that jailbreaking iPhones doesn't violate copyright law. Does that mean we'll start to see businesses cropping up selling legally hacked, customized iPhones?

The U.S. Copyright Office and Library of Congress announced Monday that jailbreaking is one of several practices that don't violate the Digital Millennium Copyright Act (DMCA).

Modifications purely for the purpose of making an iPhone, or other, similarly protected device, compatible with third-party software are fair use, Marybeth Peters, register of Copyrights, wrote in a ruling. She described jailbreaking as "innocuous at worst, and beneficial at best."

The decision, although limited in scope, strikes a blow for property rights. It says: If you buy an iPhone or iPad, it's your property, and you have a right to do what you want with it. This is a traditional, common-sense approach to property rights, but one which big corporations have been trying to encroach for years, using the instrument of copyright law as a bludgeon to limit what you can do when you buy their stuff.

The decision doesn't give the green light to jailbreaking, though. For one thing, it voids your warranty, notes my colleague Barbara Krasnoff.

Apple says jailbreaking can severely degrade the iPhone's stability and reliability, according to Cult of Mac's Leander Kahney.

One intriguing question: Would it now be legal to start a business jailbreaking iPhones for other people? Could you legally buy iPhones from Apple, jailbreak them, and then sell them? weaKnees does just that kind of business for DVRs, it sells TiVos hacked to include larger hard drives than the manufacturer standard. We've had one of their hacked TiVos for three years, it works great. If weaKnees decided to branch out to selling jailbroken iPhones, would that be legal? There are 10 million jailbroken devices, representing a decent-sized market, Cult of Mac notes.

Apple told Cult of Mac that, in the past, it hasn't prosecuted people who provide jailbreaking services and software for other people. But would Apple continue that policy if the jailbreakers weren't just a bunch of hobbyists, but were rather a full-size business, with full-time employees, offices and manufacturing facilities?

Jailbreakers still face one big legal obstacle: Jailbreaking still might not be legal. "'[J]ailbreaking is legal' is not what the ruling said. It simply said that jailbreaking is not a violation of copyright law," writes GigaOm's Liz Gannes.

There are still several other legal issues that might make jailbreaking illegal, GigaOm said. The copyright office said these issues are beyond its purview. The copyright office didn't rule on whether the purchaser of an iPhone owns the copy of the software on the device, recommending instead that the issue be addressed by new laws, not regulations. The office said Apple's ability to legally restrict what applications run on its computers is not copyright law, recommending this issue should be referred elsewhere, perhaps to antitrust regulators. And iPhone purchasers might be bound by state contract law.

So you might want to hold off on shopping for a location for your new, million-dollar business jailbreaking iPhones and iPads.

Mitch Wagner is a freelance technology journalist and social media strategist.