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Apple Inc.'s control over its iPhone and other devices via its iTunes store was undercut Monday by a federal ruling legalizing jailbreaking, or altering the devices to install unapproved software, a practice used now by a small number of customers.

The Library of Congress, which helps oversee copyright law, removed a legal cloud over altering of iPhones, iPads and iPods, to install and run software not purchased from Apple.

Jennifer Granick, civil liberties director at Electronic Freedom Foundation, the digital-rights organization that pushed for the change, said the ruling could open the door for third-party app stores. "Innovators now know that there will be customers for them," she says.

It's unclear how many companies will take advantage of the ruling, which affects a law called the Digital Millennium Copyright Act. By one estimate just 8% of iPhones have been altered to allow such downloads.

"I don't think it's that big a deal," said Charles Golvin, an analyst at Forrester Research Inc. "The mainstream iPhone customer isn't complaining about apps they can't get because of Apple's restrictive policies."

Apple has reviewed and maintained veto power over apps for the iPhone since it opened the device to outside developers in 2008. These apps can only be downloaded from Apple's App Store. Monday's ruling applies to other smartphone makers but only Apple now restricts what apps can run on its devices.

Computer experts have found ways to get around the code that tethers iPhones to the App Store, however, allowing device owners to download and run programs that haven't been approved by Apple. The legality of the practice was not clear, so it hasn't caught on widely.

Mario Ciabarra, president of Rock Your Phone Inc., which sells apps for jailbroken iPhones, says close to $2 million worth of about apps for about four million iPhones have been downloaded from his store. He said the company felt that what it was doing was legal, but was not eager to argue that point in court. What this ruling does "is make it very clear that it is okay," he said.

Apple, which says it has sold about 50 million iPhones worldwide, has discouraged jailbreaking. A spokeswoman did not address the ruling directly, but explained the company's policy.

"Apple's goal has always been to insure that our customers have a great experience with their iPhone," she said, adding that "jailbreaking can severely degrade the experience" of the iPhone and that it "can violate the warranty and can cause the iPhone to become unstable and not work reliably," she said.

In 2008 the EFF, asked the Library of Congress to authorize jailbreaking, arguing that the rights of Apple and other smartphone makers wouldn't be infringed because any changes to the devices are for the personal use of the phone owner. Apple disagreed, arguing that jailbreaking its iPhone would open up consumers and Apple to harm and that the practice was a violation of the law.

The U.S. Copyright Office, a unit of the Library of Congress, on Monday said that Apple's objections appeared to be rooted partly in the potential "harm to its reputation" which isn't protected by copyright law.

It said that phone owners have the right to run whatever legal programs they want on their devices and that "modifications that are made purely for the purpose of such interoperability are fair uses."

The action was in the form of a final rule, which would require a legal challenge to overturn.

The Library of Congress also ruled that it was legal to modify software on a used phone so that it can run on a different carrier's network, although other technical barriers make it difficult to use an iPhone with networks other than that of AT&T Inc., the sole carrier authorized by Apple in the United States.

The government said the use of snippets of DVDs and other videos for use in universities and schools have fair use protections under the law. However, it rejected other applications for fair-use protections, including a request that consumers be allowed to use their own software to access streaming online video from Netflix Inc. or other providers.

Could 84% of Facebook soon fall into the hands of a web designer (later wood pellet distributor) called Paul Ceglia? It’s unlikely, but to prevent it, Facebook will have to disprove Ceglia’s claims in court.

According to the lawsuit (embedded below), filed in the Supreme Court in New York’s Allegany County last month, Paul Ceglia signed a contract with Facebook in April 2003 to design and develop thefacebook.com (Facebook’s original name).

Ceglia claims that, according to the contract, he was to be given a $1,000 fee and a 50% stake in Facebook for services rendered, with a further 1% stake for each day until the site was finished, which was on February 4, 2004. Add it all up, and Ceglia claims he should be the owner of 84% of Facebook.

The terms of the contract are weird, and the timing (more than six years after the contract was signed) of the lawsuit is suspicious at best, but the story gets even weirder from there, as Ceglia was sued last year for failing to deliver wood pellets to customers, with damages to the tune of $200,000.

We don’t see Ceglia winning this, but it already caused some problems for Facebook; the court has issued a temporary restraining order, barring founder Mark Zuckerberg and Facebook from transferring any assets. Facebook asked for the case to be transferred to a federal court, and is trying to have it annulled.

Ceglia v. Facebook Motion for Dissolution

If you're looking for a delicious tale about corporate guile, greed, and cynicism – and you have lots of time to spare -- then check out the newly unsealed court filings that Viacom and Google posted yesterday in the entertainment company's $1 billion copyright infringement suit against Google-owned YouTube.

Viacom says that YouTube built traffic and ad sales by allowing users to post clips they'd snagged from copyrighted movies and TV shows, including The Daily Show and The Colbert Report. Google says Viacom could have had the clips taken down but wanted them there -– and surreptitiously posted many itself -- to create viral marketing campaigns for its entertainment.

Among the Holy Toledo revelations:

Viacom cites emails from YouTube co-founder Steve Chen including one where he says "if you remove the potential copyright infringements ...  site traffic and virality will drop to maybe 20% of what it is."

Viacom says Chen discussed in another instance how YouTube could handle a hot news clip from CNN: "[I] really don't see what will happen. what? someone from cnn sees it? he happens to be someone with power? he happens to want to take it down right away. he gets in touch with cnn legal. 2 weeks later, we get a cease & desist [takedown] letter. we take the video down."

On May 10, 2006, during Google's effort to buy YouTube, Viacom says that Ethan Anderson, International Business Product Manager for Google Video, stated: "I can't believe you're recommending buying YouTube. . . . they're 80% illegal pirated content."

Viacom adds Google and YouTube produced "almost none" of the most damning internal emails and documents. For example, YouTube co-founder Chad Hurley told lawyers "that he 'lost all' of his YouTube emails for the key time period of this case." But co-founder Jawed Karim, who left YouTube in 2006, kept them on his personal computer and turned them over.

"When Mr. Hurley was shown the email chains preserved by Mr. Karim, he developed serial amnesia," Viacom says. So, apparently, did Larry Page, one of Google's two co-founders. Viacom says that he "essentially disclaimed memory on any topic relevant to this litigation, even including, for example, whether he was in favor of Google's acquisition of YouTube, even though it was Google's largest corporate transaction to date and viewed as transformative to its business."

Then Viacom takes out its stiletto: "We enclose Mr. Page's entire deposition…. This Court can decide whether these key executives and witnesses behaved with the level of candor and respect for the legal process that this Court has a right to expect from senior executives of important public companies."

Google's filing is less juicy, but has its moments. For example, the search giant says that although Viacom charges that "YouTube is some kind of 'pirate' site, behind the scenes Viacom thought so highly of YouTube that it tried, unsuccessfully, to buy it."

On February 2, 2007, Viacom insisted that YouTube take down all of its copyrighted clips. "By the next business day," Google says, "YouTube had taken down virtually all the videos that Viacom's mass takedown notice identified. Despite Viacom's apparent expectations that YouTube's traffic would decrease and traffic to Viacom's own websites would soar after those videos were removed, neither prediction came true. Viacom then turned to litigation, filing this lawsuit on March 13, 2007 and demanding $1 billion."

Meanwhile, Google says, Viacom "regularly uses so-called 'stealth marketing' to get its content onto YouTube. The goal is to create the appearance of authentic grassroots interest in the content being promoted." Google cites a marketing executive at Viacom's Paramount studio who said that clips posted to YouTube "should definitely not be associated with the studio -- should appear as if a fan created and posted it." To accomplish that, Google says that "Viacom employees have made special trips away from the company's premises (to places like Kinko's) to upload videos to YouTube from computers not traceable to Viacom."

Also, "Viacom has altered its own videos to make them appear stolen." Indeed, Google says that a former president of MTV, not named, testified that Viacom didn't take down clips from The Daily Show and The Colbert Report because "we were concerned that Jon Stewart and Stephen Colbert believed that their presence on YouTube was important for their ratings as well as for their relationship with their audience."

The Super Bowl may be long over, but Brand Battle 2010 continues to rage on, as yet another commercial is bit by the controversy bug — this time one of those adorable spots from E-Trade featuring a talking baby named “Lindsay.”
 
According to the New York Post, actress Lindsay Lohan is suing the investment site on the grounds that the man-eating, substance-abusing baby in the commercial is based on her.

Lohan’s lawyer, Stephanie Ovadia, is asking that the commercial be taken off the air and every copy of the offending spot be rounded up (which could now be more difficult given today’s coverage). The actress is also asking for $100 million.

According to Ovadia: “Many celebrities are known by one name only, and E-Trade is using that knowledge to profit… They used the name Lindsay…They’re using her name as a parody of her life. Why didn’t they use the name Susan? This is a subliminal message. Everybody’s talking about it and saying it’s Lindsay Lohan.”

Ovadia also says Lohan was mistreated because E-Trade didn’t get her approval nor offer her compensation for allegedly being referred to in the ad. Now, the lawyer says her client is owed $50 million in exemplary damages, as well as $50 million in compensatory damages.

Although Ovadia says that the spot — which debuted during the Super Bowl and aired during the Winter Olympics — helped garner E-Trade mucho money, it wasn’t one of the most popular ads to premiere. It didn’t rank tops with either online viewers or couch potatoes (although the talking baby series has racked up a lot of success in the past).

Still, today it joins a cadre of commercials that cleaned up on hits due to controversy — including the Tim Tebow spot, GoDaddy’s rejected “Lola” ad and men’s-only dating site ManCrunch’s similarly punted ad.

One could argue that by suing E-Trade, Lohan is calling even more attention to the ad in question. As of right now, the ad has nearly 2.5 million views on YouTube. It remains to be seen — most likely tomorrow — what effect this lawsuit has on further increasing visibility. But judging from the fact that it’s been cropping up all over the web since the litigious news hit, you can bet Lohan’s legal ire will ensure the vid’s virality for at least the remainder of this week.

Check out the vid below and let us know in the comments whether or not Lohan has a case.

A 21-year-old Minnesota man's lawsuit against CBS claims that producers for the network's medical show, "The Doctors," tricked him into appearing on-air for a surgery to remove "pearly penile papules" from his penis.

Courthouse News' Karina Brown reports that Tyler Bowling claims he contacted California-based cosmetic surgeon Dr. William Groff in 2009 about a laser treatment to remove pimples from his penis. Dr. Groff's office, he says, offered the $4,500 treatment free of charge if Bowling would agree to "discuss his condition" on "The Doctors."

Bowling claims that Dr. Groff's office told him that the show was seen only by doctors and medical students, and that they neglected to tell him about the studio audience. When informed that the show would air nationally on CBS, Bowling says he expressed reservations but that Dr. Groff's secretary "proceeded to cajole, assuage and persuade [him] that appearing was no 'big deal' and that no one would see the episode and that [his] appearance would be anonymous," the lawsuit says.

Bowling claims that he was then persuaded to sign release forms despite his hesitation and that he was rushed onto the show's set in front of the live audience.

In the appearance, seen below, the show's hosts claim Bowling emailed the show about his problem and that Bowling was "brave enough" to appear on the show to discuss his condition. They then invite him to undergo the laser treatment and check-in with him after the treatment to see how it went.

In the lawsuit — which he filed against Dr. Groff, La Jolla Cosmetic Surgery Center, CBS Television Distribution, Stave 29 Media Productions, and Lumenis — Bowling claims the appearance resulted in "relentless embarrassment and harassment" and he seeks punitive damages for privacy invasion, fraud, negligent misrepresentation, emotional distress, and misappropriation of his likeness.

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The Obama administration asked the Supreme Court Friday to allow the government to seek nearly $300 billion from the tobacco industry for a half-century of deception that "has cost the lives and damaged the health of untold millions of Americans."

Both sides in a landmark, decade-long legal fight over smoking took their case to the high court Friday.

The administration, joined by public health groups, wants the court to throw out rulings that bar the government from collecting $280 billion of past tobacco profits or $14 billion for a national campaign to curb smoking.

Leading tobacco companies want the justices to wipe away court holdings that the industry illegally concealed the dangers of cigarette smoking. If they succeed, the attack on their profits also would be halted.

Friday's filings with the Supreme Court mark the latest phase in a lawsuit that began during Bill Clinton's presidency.

Philip Morris USA, the nation's largest tobacco maker, its parent company Altria Group Inc. and R.J. Reynolds Tobacco Co. filed separate but related appeals that take issue with a federal judge's 1,600-page opinion and an appeals court ruling that found the industry engaged in racketeering and fraud over several decades. Appeals from other tobacco companies also were expected.

In 2006, U.S. District Judge Gladys Kessler ruled that the companies engaged in a scheme to defraud the public by falsely denying the adverse health effects of smoking, concealing evidence nicotine is addictive and lying about their manipulation of nicotine in cigarettes to create addiction. A federal appeals court in Washington upheld the findings.

At the same time, however, the courts have said the government is not entitled to collect $280 billion in past profits or $14 billion for a national campaign to curb smoking.

The companies argue that the government improperly used the Racketeer Influenced and Corrupt Organizations, or RICO law, against them. The racketeering law often is employed against the Mafia and other criminal organizations.

The companies also say the courts' decision to brand their statements about smoking as fraudulent unfairly denied them their First Amendment rights to engage in the public-health debate about smoking. "As long as these statements were true or made in good faith, they fall squarely within the First Amendment's Speech and Petition Clauses, which provide constitutional protection for 'debate on public issues,' " Philip Morris said. Philip Morris makes Marlboro cigarettes and more than a dozen other brands.

The administration said the money it seeks from the industry is commensurate with the harm it has caused. "For the last half century, those defendants have engaged in a pattern of racketeering activity and a conspiracy to engage in racketeering that has cost the lives and damaged the health of untold millions of Americans," Solicitor General Elena Kagan, the administration's top Supreme Court lawyer, wrote.

The other tobacco company defendants in the lawsuit are British American Tobacco Investments Ltd. and Lorillard Tobacco Co.

Philip Morris, R.J. Reynolds and Lorillard account for nearly 90% of U.S. retail cigarette sales. A former U.S. subsidiary of British American Tobacco, Brown & Williamson Tobacco Corp., merged with Reynolds in 2004.