Government Declares iPhone Jailbreaking and Unlock legal

The Library of Congress has deemed that jailbreaking your iPhone in order to install applications not approved by Apple and/or to unlock is legal under new rules announced today.

According to the Associated Press, the decision to allow the practice commonly known as "jailbreaking" is one of a handful of new exemptions from a federal law that prohibits the circumvention of technical measures that control access to copyrighted works. Every three years, the Library of Congress authorizes such exemptions to ensure that existing law does not prevent non-infringing use of copyrighted material. Another exemption will allow owners of used cell phones to break access controls on their phones in order to switch wireless carriers.

This is great news for the jailbreak community! We'll have more details as they become available.
Update:
The Electronic Frontier Foundation has issued a press release outlining the three critical exemptions to the Digital Millennium Copyright Act (DMCA) anticircumvention provisions today.

The Copyright Office rejected Apple's claim that copyright law prevents people from installing unapproved programs on iPhones: "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 purely for the purpose of such interoperability are fair uses."

"Copyright law has long held that making programs interoperable is fair use," confirmed Corynne McSherry, EFF's Senior Staff Attorney. "It's gratifying that the Copyright Office acknowledges this right and agrees that the anticircumvention laws should not interfere with interoperability."

Update x2:
Here is the ruling itself.