DMCA hearings, phone/tablet unlocking

Copyright Office: Jacqueline Charlesworth
Michelle Choe
Regan Smith
Cy Donnelly
Steve Ruhe
John Riley
Stacy Cheney (NTIA)
Proposed Class 11-12: Unlocking – wireless telephone
handsets and tablets Proposed class 11 would allow the unlocking of wireless
telephone handsets. “Wireless telephone handsets” includes all mobile
telephones including feature phones, smart phones, and “phablets” that are used
for two-way voice communications. Proposed class 12 would allow the unlocking
of all-purpose tablet computers. This class would encompass devices such as the
Apple iPad, Microsoft Surface, Amazon Kindle Fire, and Samsung Galaxy Tab, but
would exclude specialized devices such as dedicated e-book readers and
dedicated handheld gaming devices.
Proponents: Erin Mackey, Institute for Public Representation,
Georgetown Law (counsel for Consumers Union)
George P. Slover, Consumers Union: Extend useful lives, save
money, promote innovation. No one opposed exemption for tablets; one who opposed
for handsets, Tracfone, has now joined with CCA for a differently drawn
exemption.  Why we wrote it identically
for handsets/tablets: functionally identical for these purposes.
Approved twice before in 2006 and 2010; when phased out,
Congress called for its reinstatement, and law passed to do so. Exemption is
modeled on what Congress enacted w/expansion to tablets as envisioned by
Congress. Mobile device unlocking has no business getting caught up in
copyright, convenient as it may be for business models. Has nothing to do with ©
infringement; it’s about being able to use legally purchased equipment. Focus
is on network connecting software; lock only obstructs access to function; even
if connecting software is copyrightable, it is not being copied when it is
connected to another network.  Even if it
were, it’d be protected under §117 as essential step.  Need not own the phone/software to make full
legitimate use of purchased device. Fundamental rights of ownership as
cornerstone of law; cuts short useful life of otherwise useful devices; props
up anticompetitive business models.
Q: for the record, why you believe the unlocking policies of
the carriers are insufficient.
A: First, they are voluntary, which means they can be
changed at any time.  Second, there are
restrictions and conditions: you need to work with your current carrier, eliminating
flexibility for consumers who would rather turn over the phone/lock and have
someone else unlock. Third, over time voluntary policies came to fruition when
everyone was waiting for legislation; when there was no exemption, at least one
carrier, AT&T, significantly restricted its policy. There’s no substitute
for guarantee.
Q: remaining dispute is over scope.  Any limitation to used cellphones/tablets, as
in existing exemption?
A: imposing conditions or restrictions makes it difficult
for the ordinary consumer.  Proof
requirement: can you prove it was used? 
At least one definition is previously activated on another wireless
network. Even if you could satisfy that, consumers should have latitude to part
w/phone before that happens: under a contract where you get a phone for a
certain period of time and then you’re allowed to get a new phone for renewal.
Maybe a 60-year-old like me who only wants to use the phone to make calls would
like to hang on to the old one and not upgrade, but you want the package. It
doesn’t make sense to give it up; pass it on to your nephew.
Charlesworth: don’t you usually have to hand the old one
A: new arrangements, some with transparent subsidies and
some not.  If your monthly phone bill
wouldn’t change, you should be allowed to get the phone.
Charlesworth: what’s your obligation under the contract?
A: you’ve agreed to have service with your carrier for 2
years etc.  There are contractual
obligations that don’t have to do with the lock on the phone.
Charlesworth: would they let you walk out of the store with
a phone that they didn’t activate on their network? We’re going back to the
definition of used. If it’s subsidized, won’t they activate it?  The big issue is Tracfone/bulk situation
where people buy up subsidized phones and then resell them in a way Tracfone
thinks is inequitable. You’re disputing the definition based on a scenario that
I’m not sure exists in the real world.
A: We want that freedom.
Charlesworth: you can just buy the unlocked phone for
$700.  Then there’s no concern about
fulfilling your contract.
A: But if they’re going to lower the price of the monthly
service in connection with that, a consumer could weigh the pros and cons, but
if the consumer sees an advantage to being on the extended contract and just
wants to take advantage of the new phone they should be able to keep their old
phone rather than paying for a phone they don’t want and constraining them from
passing it along to someone else.
Q: so is the current exemption insufficient?
A: as a practical matter, most will be used, but we urge a
nonlimited exemption. 
Charlesworth: bulk trafficking?
A: we’re not in favor of that; in favor of individual
Charlesworth: but used may be a way to defeat the bulk
trafficking concern in the record. What’s so wrong for requiring “used” for
consumers who want to switch, even if they want to break their contract?
A: why require a day’s worth of use?
Charlesworth: so how do you address the bulk downloading
Mackey: is it a copyright concern? From the bulk unlocking
perspective, Tracfone has a number of alternative legal remedies it’s used.
From our perspective the Q is whether average consumer should face DMCA
Charlesworth: a lot of things we talk about aren’t copyright
concerns but they’re part of the concerns that are raised.  There may be other legal avenues, but assume
they think 1201 is an important factor. Can we write the exemption to exclude
bulk unlocking in some way?
Mackey: There is still a difference between CCA and ISRI.
Michael Lazarus, Competitive Carriers Association (CCA):
Nation’s leading association for wireless providers, more than 100 from small,
rural providers to national providers. 
Use to connect isn’t infringing and lack of exemption will cause harm;
strongly supports an unlocking exemption in order to associate devices
w/network of their choosing. Shouldn’t limit who can provide assistance—agent of
consumer should be allowed to perform unlocking procedure, just as locksmith
may help a consumer at home. One party wanted additional protection for
subsidies—Tracfone. CCA believes its proposal was fine, but in order to get
continuance w/o opposition we came up w/a modification that will avoid trouble
with subsidies.
Charlesworth: for the record, what is the part of your
proposal that protects against bulk unlocking.
A: contract law formulation. Members often have
subsidies.  You should not be able to use
the exemption unless you have adhered to the contract.  You can pay off the early termination fee and
your obligations will end and you can unlock your phone.
Q: ISRI says that it’s unclear who the owner is. If I buy a
locked phone on eBay, I don’t know what the original owner has done w/r/t their
original contract.
A: we were concerned with the original owner. We don’t think
that owner should have to track down what has gone on. Good faith obligation
attached to original owner.  That second
owner should be able to get phone unlocked w/out worrying what happened before.
Q: suppose I want to give a phone to my cousin.  Is the subsequent owner required to satisfy
the contract? 
A: in that situation, we don’t have a particular view.  Dad buys phone, gives it to kid—shouldn’t be
able to get around the contract, but that’s a contract matter and not a DMCA
Q: so if we were to make clear that subsequent owners wouldn’t
be required to assess whether original owner satisfied contract obligations,
you’d be fine?
A: yes.
Eric Harris, Institute of Scrap Recycling Industries, Inc.
(ISRI): Represent more than 1600 processors, brokers, and industrial consumers.
Recyclers of used phones and tablets: lawfully acquire, refurbish, and resell.
The work provides important public and economic benefits by enhancing value
consumers can receive.  Increases variety
for consumers and enhances competition. Recyclers need to be able to unlock
legally obtained phones in bulk.  Risk is
substantial under current law. Only Tracfone objected, out of concerns for
illegal phone trafficking. ISRI’s members don’t do that or condone it.
Charlesworth: there seems to be different versions of
trafficking. Tracfone describes people buying subsidized, locked phones at a
discounted price, then instead of accessing that carrier they sell them
somewhere else: phone arbitrage. Can you comment?  Also, black market in phones that were meant
to go to carriers for subsidized plans but fell into the wrong hands. 
A: We’ll take their word for it that it happens. We are fine
with “used” exemption. Our members don’t deal in new phones or buy phones at
store.  Definition of “used” could be
helpful, but we’re comfortable with where it appears to be going—lawfully acquired
and activated on the telecom network of a carrier.
Q: what about fulfilling the contract, not being used for
unlawful purpose, not obtained by theft or fraud?
A: punt to law students, but there is a path forward here.
Phil Malone: director of Stanford Law clinic/not speaking
Donna Long, Stanford Law, ISRI: CCA proposal was original
owner fulfilling contract obligations, but for ISRI’s members that would be
impractical—ISRI isn’t the original owner, but subsequent owner. No way of figuring
out whether they’ve satisfied the contract.
Q: if we clarified that the secondary owner wouldn’t be
burdened with that, would that satisfy you?
A: yes.
Brian Weisenberg, Stanford Law, representing ISRI: Unlocking
Act of 2014: (1) Demonstrates that Congress and president believe that any
copyright concerns should yield to consumer freedom, regardless of whether they
own the software/copies.  (2) Act allows
bulk unlocking: allows “owners” to unlock. 
Recyclers are owners.  Provision
that would have dealt w/ bulk unlockers separately was removed; even when it
was in the bill, Goodlatte said it wasn’t intended to impair recyclers.  They are like a used book store.  Vital to explicitly permit this in order to
avoid ambiguity. Only one party opposes exemption, and even Tracfone supports
an exemption that is limited. Only issue is wording.
Long: Tracfone has available and regularly uses many other
legal tools against traffickers.
Q: isn’t it true they’ve used the DMCA successfully?
Long: they’ve won on all of the 10-12 claims they asserted.
[As I recall, this is largely because of defaults by most defendants.]
Also, our language is designed to avoid trafficking.  Resold new without being activated = would
never fit ISRI’s proposed definition.

Q: why propose exclusion for devices obtained by theft or fraud? Not in the
existing one.
Lazarus: most of the carriers can ID a stolen device. This
was a part of our negotiations with Tracfone.
Q: what about a purchase on eBay, or one of ISRI’s members:
do you have the same position on innocent second purchasers?
A: CCA does; not in position to address Tracfone
Q: not for “any unlawful purpose” limit—what do you mean?
A: criminal trafficking—fit in w/Tracfone.  [So if you unlocked in order to harass your
ex, would you fall outside the exemption? 
If not, why add in all these cross references to “other” laws? This is
the same weirdness as earlier.]
Q: is the proposal designed to cover bulk unlocking of used
A: we are concerned w/contract principles; that’s not what
seems to be going on with ISRI’s formulation; not much disagreement. We weren’t
trying to stop legalized bulk unlocking
Slover: if you take care of innocent second purchaser and don’t
require them to know provenance, that would take care of many of our concerns.
We are concerned w/problems of proof for subsequent consumers.  Current proposal has limiting language “including”
abusing a subsidy—including = not limited to; could be anything! Thus we think
you shouldn’t load up on conditions that turn into proof requirements for an
ordinary consumer.

Weisenberg: ISRI agrees that responsibility for subsidies should lie with the
original owner. We just want no ambiguity for bulk recyclers.
Cheney: Mail-order phones available from Overstock and
others.  Is that covered under proposed exemptions?
You might get the phone, then you have to call after you receive it to activate
Lazarus: yes—you can buy an unlocked phone on Amazon, or a
locked one.
Slover: yes, ours covers it as long as you are the owner.
Q: used tablets, not new tablets, as well?  Treat them the same.  [General nods.]
Weisenberg: yes, for ISRI.
Lazarus: yes, for CCA.
Slover: yes, we want the same exemption to apply to all
devices that fit within the same function. Consider the one situation where we
think there should be the option for a market to evolve to allow consumers to
have a choice. Past exemptions discouraged competition/innovation in business
models. The fewer restrictions on the exemption, the more the market can evolve
Q: why did Congress reject a specific bulk unlocking
Slover: they wanted to reinstate the 2010 exemption as it
was; loathe to step into the position of dictating changes, particularly for an
interim period, with the exception of device owner v. owner of copy of
software. Left it open to the Librarian.

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