Legal protection for people who unlock their mobile phones to use them on other networks expired last weekend. According to the claims of major U.S. wireless carriers, unlocking a phone bought after January 26 without your carrier's permission violates the Digital Millennium Copyright Act (“DMCA”) whether the phone is under contract or not. In a way, this is not as bad as it sounds. In other ways, it's even worse.

What changed? The DMCA prohibits "circumventing" digital locks that "control access" to copyrighted works like movies, music, books, games, and software. It's a fantastically overbroad law that bans a lot of legal, useful, and important activities. In what's supposed to be a safety valve, the U.S. Copyright Office and the Library of Congress have the power to create exemptions for important activities that would otherwise be banned by the DMCA. In 2012, EFF asked for - and won - exemptions for jailbreaking or rooting mobile phones to run unapproved software, and for using clips from DVDs and Internet video in noncommercial vids. Consumers Union and several smaller wireless carriers asked for an exemption for unlocking phones. The Copyright Office granted their exemption too - but sharply limited the window to just a few months.

First, the good news. The legal shield for jailbreaking and rooting your phone remains up - it'll protect us at least through 2015. The shield for unlocking your phone is down, but carriers probably aren't going to start suing customers en masse, RIAA-style. And the Copyright Office's decision, contrary to what some sensational headlines have said, doesn't necessarily make unlocking illegal.

Unlocking is in a legal grey area under the DMCA. The law was supposed to protect creative works, but it's often been misused by electronics makers to block competition and kill markets for used goods. The courts have pushed back, ruling that the DMCA doesn't protect digital locks that keep digital devices from talking to each other when creative work isn't involved. And no creative work is involved here: Wireless carriers aren't worried about "piracy" of the software on their phones, they're worried about people reselling subsidized phones at a profit. So if the matter ever reached a court, it might well decide that the DMCA does not forbid unlocking a phone.

Now, the bad news. While we don’t expect mass lawsuits anytime soon, the threat still looms. More likely, wireless carriers, or even federal prosecutors, will be emboldened to sue not individuals, but rather businesses that unlock and resell phones. If a court rules in favor of the carriers, penalties can be stiff - up to $2,500 per unlocked phone in a civil suit, and $500,000 or five years in prison in a criminal case where the unlocking is done for "commercial advantage." And this could happen even for phones that are no longer under contract. So we're really not free to do as we want with devices that we own.

Phones are, of course, the tip of the iceberg of problems the DMCA has created. It kills aftermarkets, interferes with legitimate research, and squelches creativity in new media. The exemptions created by the Copyright Office can be helpful but, as this episode shows, they are too narrow and too brief. They also turn a small, specialized federal office into a sort of Technology Regulation Bureau. It's absurd that this small group of copyright lawyers and librarians is tasked with making decisions about the future of electronics markets.

So what can we do? Creating and defending the next round of exemptions will start in late 2014. If lawsuits happen, the courts should recognize that the DMCA is being misused, and refuse to apply it to anti-competitive software locks. Ultimately, what we really need is to either fix the exemption process or reboot the anti-circumvention provisions of the DMCA, or both.