Every three years, the librarian of Congress determines when scrambling technology that protects copyrighted works can be legally “circumvented”, i.e., hacked. The goal of the exercise, part of § 1201 of the 1998 copyright law, is to prevent anti-piracy technology from halting our ability to use works in noninfringing ways. For example, in 2007, film professors were allowed to circumvent DVD piracy protection to compile film clips for classroom use.

This summer’s “Get Out Of Jail Free” cards again addressed DVDs, this time granting professors and “media studies students” the right to incorporate short portions of motion pictures into documentaries, noncommercial videos and educational uses like criticism or comment.

The bigger news was the librarian’s pardon of programs that download applications onto “smart phones” that are other­wise blocked, a process known as “jailbreaking.” The decision legitimizes a gray area when iPhone owners add apps that haven’t been approved by Apple Inc. Unless unlocked, an iPhone can only download apps from the iTunes store. This model differs from Google’s Android and other operating systems that allow users to download apps from outside a prescribed source.

The jailbreak decision has been hailed as a way to open up the iPhone apps market, already large at more than 140,000. But its implications may be overstated: Apple had never sought to prosecute jailbreakers.

Contract law, so far at least, still governs the download rights of smart-phone owners. The decision does nothing to change the terms of service that govern Apple (or anyone else) as to how they authorize customers. Jailbreaking violates Apple’s terms and voids the warranty. If an unauthorized application degrades the service of the iPhone, Apple isn’t responsible. A jailbreaking iPhone user may safely skate past § 1201 but still bears the risk of damage from applications that aren’t obtained from iTunes. The marketplace may cause contract terms to change. If download-from-anywhere becomes a must-have feature to entice the next purchaser of a smart phone, Apple will either change its policy or lose that customer.

Quite apart from the business model that sends users to iTunes, Apple may be right that a free-for-all in downloaded apps can disrupt the functioning of the iPhone. Every computer owner fears the malware concealed in an otherwise innocuous e-mail attachment. But it’s not clear which factor dominates — potential harm to the device or to the business model. Apple’s critics might compare the iTunes-only approach to the 1968 Carterfone case. There, the old monopoly telephone network argued that attaching a noncompany supplied device could fry the phone grid: Thou shalt attach only Princess phones from the kingdom of old AT&T.

The Federal Communications Com­mis­sion repudiated the “harm to network” argument. Carterfone is cited for the right to attach devices (or here, download apps) of the customer’s choosing. “Network harm” is cast as a bogeyman to distract attention from the real objective of regulatory protection of vertical integration. But plugging a phone into a jack and downloading software may be like comparing apples and rotten apples.

Absent market failure, it is hard to see why Apple’s contract terms shouldn’t endure, so long as Apple sees those terms in its interests. And with widespread download opportunities from competing smart-phone providers, evidence of market failure appears lacking.

OTHER DEVELOPMENTS LOOM LARGER

Which leads to a second point: The lib­rarian’s decision, addressing one, relatively unlitigated aspect of downloads (§ 1201 liability), comes amid other market and policy developments that loom larger. In particular, the Federal Communications Commission and Congress are debating network neutrality, including the right of Internet users to download any application via an Internet service provider’s service. That issue may overtake the public policy debate about smart-phone apps. If the FCC or Congress enacts the freedom to download apps through your broadband provider onto a smart phone, how will that affect the terms of service of a device maker that countermand that freedom? Stay tuned.

Finally, the decision points up that anti-circumvention questions are about business models, not merely copyright. And business practices typically wind up at the FCC, the Federal Trade Commission or the U.S. departments of Justice or Commerce. It may have made sense in 1998 to ask the librarian to do this triennial review; the referral seems antiquated in a broadband world. (Most of the preparatory work is done by the Copyright Office. But the decision is the librarian’s; the pronoun “I” appears 11 times in the two-page decision).

In the smart-phone case, the librarian’s reference point is the copyright in computer programs that jailbreakers hack to unlock a phone or download apps. While valuable, the program isn’t being accessed to steal it but to defeat its protective armor and compromise a business model. The copyright issue here is tangential to the issue at hand. Even the decision to allow DVD snippets for educational or documentary purposes could go beyond copyright “fair use.” That practice touches on a host of Internet liability issues. The issues are already in the courts and extend beyond the question of circumvention.

We’re fortunate to have the librarian’s words on these scrambling issues, but they are not likely to be the last ones.

Daniel Brenner is a partner in the technology, media and telecoms group at Hogan Lovells in Washington and teaches Internet law at Georgetown University Law Center.