At the beginning of this year EFF identified a dozen important trends in law, technology and business that we thought would play a significant role in shaping digital rights in 2010, with a promise to revisit our predictions at the end of the year. Now, as 2010 comes to a close, we're going through each of our predictions one by one to see how accurate we were in our trend-spotting. Today, we're looking back on Trend #4, hardware hacking:

An increasingly active hobbyist community is figuring out how to make a range of devices more useful and open. They are learning how to install new software or make third-party parts, devices, and services work with proprietary high-tech products like video game consoles, printers, portable audio players, home entertainment devices, e-book readers, mobile phones, digital cameras, and even programmable calculators. And, oh yes, contending with restrictions on both cars and garage doors.

In 2010, phone jailbreaking will become even more mainstream, and the concept will be routinely applied to other sorts of devices. EFF's Coders Rights Project will have no shortage of work to do defending users and developers who want to make their hardware do more than it was designed for.

As we predicted, jailbreaking has become more mainstream —in part because of two cell-phone related DMCA exemptions that EFF championed: one to clarify the legality of cell phone "jailbreaking" —software modifications that liberate iPhones and other handsets to run applications from sources other than those approved by the phone maker —and another to renew a 2006 rule exempting cell phone unlocking so handsets can be used with other telecommunications carriers. Both exemptions were granted. Of these, the jailbreaking exemption has received the most attention. More than a million iPhone owners are said to have "jailbroken" their handsets in order to change wireless providers or use applications obtained from sources other than Apple's own iTunes "App Store," and many more have expressed a desire to do so. But the threat of DMCA liability had previously endangered these customers and alternate applications stores.

Importantly, the Copyright Office squarely rejected Apple's claim that installing unapproved programs on iPhones is a form of copyright infringement. The Office recognized that "When one jailbreaks a smartphone in order to make the operating system on that phone interoperable with an independently created application that has not been approved by the maker of the smartphone or the maker of its operating system, the modifications that are made purely for the purpose of such interoperability are fair uses." We couldn't agree more. And last week the Ninth Circuit reinforced the importance of this distinction, noting that violations of license agreements do not always amount to copyright infringement. Blizzard had argued that the manufacturer of an add-on to World of Warcraft was secondarily liable for copyright infringement because it provided software that allowed users to play in unauthorized ways. Not so, said the appellate court, because there was no direct liability to begin with. The license term that forbade WoW players from using Glider was a covenant —a promise not to do something —rather than a condition —limiting the scope of the copyright license. And while violating "antibot" covenants might breach a contract, it does not violate any copyright —by contrast, creating a derivative work might.

This point may seem a bit arcane, but it's crucial because it helps avoid a situation in which violating contracts and EULAs could result in a copyright infringement lawsuit (with the heavy club of statutory damages, attorney's fees and low standards for injunctions) rather than just a simple breach of contract claim. As the court observed: Were we to hold otherwise, Blizzard — or any software copyright holder —could designate any disfavored conduct during software use as copyright infringement, by purporting to condition the license on the player's abstention from the disfavored conduct. The rationale would be that because the conduct occurs while the player's computer is copying the software code into RAM in order for it to run, the violation is copyright infringement. This would allow software copyright owners far greater rights than Congress has generally conferred on copyright owners.

We can expect more litigation on this issue, as users and innovatorsfight back against the use of software license agreements to stifle innovation.