Under the Digital Millennium Copyright Act (DMCA), Congress set up a mechanism to allow copyright holders to enforce penalties against individuals who bypass “copyright protection systems” (i.e. the digital locks that copyright holders use to restrict access or manipulation to copyrighted content). DMCA § 1201 grants the Library of Congress the ability to grant exemptions for certain actions bypassing copyright protection systems if the Librarian of Congress believed that the system adversely affected the ability of users of the copyrighted work to make “non-infringing uses” of the work, for example, creating digital copies of computer games on obsolete hardware. Last October, the Library of Congress issued a final ruling that would decline to extend the exemption for unlocked smartphones after a 90-day transitional period. While there is some doubt as to whether unlocking smartphones is covered under the DMCA, under the current ruling, smartphones can now only be unlocked by the owner of the phone, who, in most cases, is the carrier, not the consumer. Consumers, the White House, and the Federal Communications Commission all came out against the ruling with worries about competition and consumer flexibility.

Why do carriers love it and consumers hate it?

Carriers see the exclusive power to unlock smartphones as a way to protect their initial investment of selling consumers smartphones at a deep discount. Prior to the final ruling, if a consumer was dissatisfied with her service, she could pay her early termination fee, unlock her phone and move to another carrier. Now, if the same consumer wants to walk she is welcome to, but she’ll have to leave her phone behind. For manufacturers, the strategy of partnering with a single carrier for high profile smartphone release is more feasible under the new ruling. While the legality of such practices has been challenged on antitrust grounds, a ban on unauthorized unlocking would make exclusive releases even more profitable for carriers, meaning more profit for manufacturers as well.

On the other hand, consumers fear that a ban on unlocking cellphones will reduce consumer choice, hurt international travelers and lower the resale value of devices paid for in full. For international travelers, the option to unlock the smartphone and purchase a short-term contract with a local carrier is no longer readily available. Now travelers must choose to either pay the high roaming charges levied by their current carrier or purchase an unlocked phone from the manufacturer at a much higher price than what is offered by carriers. The resale and gift markets would be negatively affected as well, since consumers in those markets will not have to choose between getting a locked smartphone with a potentially unsatisfactory carrier, or paying significantly more to get an unlocked smartphone.

What should you do?

For the majority of us, the answer is nothing. If you’re satisfied with your service and you’re still on contract, unlocking your smartphone won’t yield any benefits but it could yield complications. If you’re done with your contract but want to keep your device, many carriers will unlock your phone for free and let you decide whether you want to move to another carrier. If you’re looking to jump ship early, or unlock your phone for another reason, you may be in for a stern warning from your service provider with the force of law behind it (a fine up to $500,000 and up to 5 years in prison), but none of the major carriers have announced what their actual enforcement policy will be. James Baldinger, a lawyer for some of the wireless carriers, has said that “[t]he carriers’ position has always been, it’s never been about individual consumers. Individual consumers have never been the target of any of the lawsuits or enforcement proceedings or investigations.” So while it might be harder to find someone to unlock your device, its unlikely that Verizon will come knocking at your door if you do.

The F.C.C. announced that it supports unlocking of cellphones for consumers not bound by a service agreement. Under a ruling from last fall by the Copyright Office of the Library of Congress, unlocking cellphones would be in violation of the Digital Millennium Copyright Act’s Circumvention of Technological Protection Measures. R. David Edleman, an Obama administration adviser on Internet and privacy issues, said that the F.C.C.’s position was “common sense [and] crucial for protecting consumer choices…. All consumers deserve that flexibility [of changing service providers].” The Library of Congress currently stands by its position but agrees that the policy may be worth another look.

Google Reveals FBI’s Demands for Users’ Data

Google has published a “range” of times it received National Security Letters (NSL) for account information on users without warrants. The report says that Google received between 0 and 999 NSLs last year for information on between 1,000 and 1,999 accounts. Although Google was attempting to provide transparency on the use of user data, concerns raised by the FBI, Justice Department and other agencies restricted the tech titan from releasing exact numbers. Additionally, Google has stated that it does not believe that the FBI can use the NSLs to obtain “Gmail content, search queries, YouTube videos or user IP addresses.” Instead, it only believes that “the name, address, length of service, and local and long distance toll billing records” are available to Federal investigators.

China Growing Weary of Android Platform’s Dominance

China’s Ministry of Industry and Information Technology warned that the Chinese smartphone market was dependent on Google’s Android platform. Android controls about 86% of the Chinese smartphone market, and 70% worldwide. The risk, the Chinese government reasoned, is that even though Android is “open source” it still runs the risks of paying royalties for patent licensing or litigation. To counteract this market dominance, the white paper calls for emerging Chinese tech companies, like Huawei, ZTE and Baidu, to develop their own proprietary platform. Whether Chinese manufacturers will be able to fight in the battle of smartphone platforms remains to be seen, with the market already saturated by Apple and Google.

Europe to Fine Microsoft For Failure To Comply With Settlement Agreement

The European Union is expected to impose a large fine on Microsoft for failure to comply with a 2009 antitrust settlement that required Microsoft to give a choice of Web browsers with their Windows software. Under the 2009 settlement, Microsoft was to provide a “browser ballot” with download links to other browsers, including Safari, Chrome, Firefox and Opera. Microsoft ultimately did not comply with the settlement, but apologized, stating that the failure was a “technical error.” While the amount of the fine will be revealed on Wednesday, under E.U. regulations, it can assess fines of up to $7.4 billion for this violation. This isn’t the first time the E.U. has gone after U.S. tech companies; Intel is still appealing a $1.3 billion dollar fine that was assessed last year.

Last week, the Philippines Legislature passed the Cybercrime Prevention Act of 2012. The statute was aimed at deterring a wide variety of cybercrimes including hacking, distribution of child pornography, identity theft and libel. Amidst public concern that the law could be an illegitimate restriction of free speech, particularly due to the restriction of certain websites and the harsh criminal penalties for online libel, the top court in the Philippines suspended the law for 120 days and scheduled oral arguments for Jan. 15 2013. Brad Adams, Asia director for Human Rights Watch, supported the top court suspension but added that it should “go further by striking down this seriously flawed law.”

Facebook Offers New Settlement For Privacy Violations

After having its initial settlement rejected by the courts, Facebook filed a new agreement with the parties with regards to its “Sponsored Stories” advertising mechanism. “Sponsored Stories” is an advertising mechanism where Facebook shows a user’s “likes” that user’s friends. Users were not given the opportunity to opt out nor were they compensated for their endorsements. Under the new agreement, Facebook agreed to pay each of the affected users $10 and to provide opt-out options for legal minors.

Google Settles Book-Scanning Lawsuit With Publishers

After a seven-year legal battle, Google has settled with the Association of American Publishers over Google’s book scanning practice. Google has long been scanning, indexing and displaying portions of publicly available books under the “fair-use” exception of the U.S. copyright law. Since the settlement will only be binding upon the signing parties, its terms remain confidential and do not require court approval. Tom Allen, president and CEO of the AAP, said in a statement that the settlement “shows that digital services can provide innovative means to discover content while still respecting the rights of copyright holders.”

U.S. House Panel Warns of Risk in Chinese Manufactured Equipment

In an investigatory report issued October 8, the House Intelligence Committee said that the Chinese companies Huawei Technologies and ZTE, Inc. were threats to national security. Both companies sell telecommunications equipment for use in wireless networks. The report warned that malicious hardware or software implanted by these two companies could potentially cripple U.S. information networks and provide the Chinese government the ability to steal American trade secrets. Especially problematic to the Committee was the perceived links between the two companies and the Chinese government. The report stated that the U.S. government should not do business with the two companies and that American companies should avoid buying components from those companies. Both Huawei and ZTE rejected the panel’s findings as untrue and dismissed claims as speculative.