A California resident on Friday filed a class-action lawsuit against Apple over its controversial policies regarding the service of modified iPhones. Filed by the Law Office of Damian R. Fernandez on behalf of Timothy P. Smith, the suit alleges that Apple violated California antitrust law by prohibiting iPhone owners from using the device with any carrier other than AT&T.

The suit argues that mobile phone unlocking is legal thanks to a provision in the Digital Millennium Copyright Act (DMCA), and that Apple's allegedly unlawful practices are forcing consumers to pay "artificially inflated" prices for the iPhone and AT&T's service.

To clarify, a 2006 exemption in the DMCA granted by the Library of Congress prevents the prosecution of any individual who unlocks a mobile phone for personal use. This leaves consumers in the position of ostensibly being clear to unlock their own phones, but Apple is not legally required to facilitate this, or support it. Additionally, some carriers in the US have implemented a practice of providing unlock codes as early as 90 days into a contract for subsidized phones. Yet the iPhone is not subsidized through AT&T; customers purchase the phone at full price from Apple and AT&T stores, and AT&T has said that it won't be providing unlock codes. Thus, even with some legal support for unlocking, consumers are taking risks if they go that route, and Smith's suit says that this is unfair, monopolistic behavior.

Smith's lawsuit continues, alleging that Apple is unlawfully denying service and warranty coverage to customers who have modified their iPhones with third party software. Among the many other listed violations, Apple is also alleged to have devalued the iPhone by significantly lowering its price only two months after introducing the product.

Going further, the suit also alleges that Apple's conduct constitutes "unlawful, unfair, and/or fraudulent business practices within the meaning of California's Unfair Competition Act, and California Business and Professions Code sections."

The suit seeks an injunction to prevent Apple from selling the iPhone with any software locks and for the company to be prevented from denying warranty service to users who have unlocked their iPhones. InformationWeek, which first reported the suit this past weekend, reports that the lawyer heading the case will determine the proper financial penalty in the trial phase, once it is more clear how many users have been affected.