The U.S. Copyright Office says that jailbreaking one's iPhone--that is, hacking into the operating system to add software applications not authorized by Apple--is totally cool with them.
This means that the four million iPhone users who have jailbroken their phones (this reporter included) no longer have to live in fear of being shipped off to the clinker (where, despite this Lady Gaga video, iPhones are generally prohibited).
More importantly, the copyright ruling would seem to make it a little easier for entrepreneurs who have been denied access to Apple's app store to get their products to consumers. A vibrant grey market in unofficial iPhone apps has existed as long as the iPhone has been on sale, and the ruling means it will likely grow.
But it's not all good news for entrepreneurs. As Alexis Madrigal notes, Apple is under no obligation to be nice to jailbreakers. It could design its software to be incompatible with hacked phones, rendering them unusable, or it could refuse to provide technical support to users who have jailbroken their phones.
In other words the tension between Apple's desire to sell a perfect product and its desire to own a platform for entrepreneurs remains. As Paul Graham warns:
[E]vil begets stupidity. An organization that wins by exercising power starts to lose the ability to win by doing better work. And it's not fun for a smart person to work in a place where the best ideas aren't the ones that win. I think the reason Google embraced "Don't be evil" so eagerly was not so much to impress the outside world as to inoculate themselves against arrogance. That has worked for Google so far. They've become more bureaucratic, but otherwise they seem to have held true to their original principles. With Apple that seems less the case. When you look at the famous 1984 ad now, it's easier to imagine Apple as the dictator on the screen than the woman with the hammer. In fact, if you read the dictator's speech it sounds uncannily like a prophecy of the App Store.