IPhone Contract Is Long and Legally Murky

July 20, 2007 — -- Apple CEO Steve Jobs proudly proclaimed the iPhone one of the most intuitive devices ever made. Not so for the iPhone's terms-of-service contract, which at 17,000 words is one of the longest and most complex ever to accompany a wireless gadget, legal experts say.

No one reads such things, least of all early adopters eager to own the summer's most-lusted-after product. So Wired News has done the hard work for you. We read it not just once but several times, with the help of a few good lawyers.

"I think there's no chance whatsoever that a layperson would understand it and I doubt they could get through it. I think most lawyers wouldn't understand it either," says Fred von Lohmann, a staff attorney with the Electronic Frontier Foundation who in a past career crafted licensing service agreements for a living.

An Apple representative declined to answer questions or comment.

The good news: The document consists mostly of boilerplate that is standard in most wireless contracts, and contains no real surprises. Its unusual length stems from the fact that the iPhone is bundled with several services, each of which has its own licensing agreement.

The bad news: The iPhone contract may not be the last word in overly long and complex user agreements. Terms-of-service contracts promise to grow even more dense, legal experts warn, making them even more difficult to understand than they already are.

That's a problem, because even standard contracts now contain some legally questionable provisions that you should be aware of regardless of the phone and plan you use -- for example, regarding reverse engineering and arbitration.

The iPhone contract is unusual in bundling many separate agreements into a single contract. It comes in six parts, including agreements regarding AT&T's phone service, the iPhone software, the iTunes software, the use of Google Maps and of YouTube in addition to a user's consent that an e-mail from Apple "will satisfy any legal communication requirements." (Click to read the AT&T agreement, plus the other five agreements.)

Phone services typically charge roaming fees for connecting outside of the plan's footprint. This can feel like a gotcha for customers who are not fully aware of how roaming works. For iPhone users, this risk is detailed in the AT&T section, where the agreement states, "Substantial charges may be incurred if phone is taken out of the (United States) even if no services are intentionally used."

Roaming charges might apply to incoming calls, and will be levied against overseas iPhone users even when viewing messages in the gadget's "visual voicemail" feature, AT&T representatives said.

"That is a data service, so you can be incurring data charges as well. We just want to tell people when you go outside the United States, there's additional costs involved," says Mark Siegel, an AT&T spokesman. The terms of the iPhone agreement, he adds, are largely the same as any other phone using AT&T's service.

Even for those who understand such contracts, murky language abounds. Apple's service agreement, for example, largely prohibits customers from reverse-engineering its iPhone software, although reverse engineering, if done appropriately, isn't a crime, legal experts say.

"Courts have found reverse engineering is a fair use, for good policy reasons," says Jonathan Band, a Washington, D.C.-based technology attorney. "But then you have these private contracts that seem to overturn that public policy. You really do have a conflict between the public law of copyright and private law of contract."

Band says the courts in the United States are beginning to side with corporate licensing agreements prohibiting reverse engineering. However, the European Union doesn't honor such agreements, according to Band.

The AT&T agreement also prohibits aggrieved parties from unlocking the phone. Cell phone unlocking has huge financial implications for carriers, and is the subject of legal action after the federal government gave the action the OK last year.

Class-action lawsuits are also forbidden under AT&T's agreement, a point that may run counter to a Wednesday decision (.pdf) by the 9th U.S. Circuit Court of Appeals, the nation's largest federal appeals court, which is based in San Francisco. Ruling on a challenge to a long-distance phone service agreement, the appellate court said denying class-action lawsuits might not be valid in California. Separately, the Washington Supreme Court recently ruled that cell phone contracts may not ban class-action lawsuits in that state.

The iPhone agreement also says Apple may monitor users' iPhones "to verify compliance with terms of this license." It notes that Apple may collect technical information regarding users' iPhones, computers, software and peripherals, as long as such information is not used in a form that personally identifies individual users.

Von Lohmann suggests that voicemail and text messages might be vulnerable under the agreement's terms -- although he concedes that's a long shot.

"It doesn't tell you what they are going to collect," he says. "Copies of voicemails? Keeping track of your texting? Consumers deserve clearer information."