At the same time, the ruling allows consumers to "jailbreak" their phones. That allows tech savvy individuals to modify the phone's operating system to enable any application to run on the phone.
In the case of Apple, this breaks its virtual monopoly on iPhone applications that must be approved by Apple and must be purchased from its online store.
"It just allows other companies to compete so I think it's a good thing. It's bad for Apple, of course," smart phone owner Humberto Reynoso said.
Software engineers in Silicon Valley said the jailbreak ruling was a touchy one. Some would not give us a reaction on camera, saying their livelihood depends on protecting intellectual property.
"You still have to jailbreak and not everyone probably be willing to do that and probably impair the warranty somehow," Silicon Valley engineer German Alvarez said.
Others said the ruling will increase competition, allowing more developers to sell applications without getting Apple's approval through other channels.
In fact, Apple issued a warning saying: "Jailbreaking can violate the warranty and can cause the iPhone to become unstable."
The associate director of the Fair Use Project at Stanford Law School, Julie Ahrens, thinks that Apple lawyers now may be thinking of a way to require buyers of iPhones to agree not to modify their phones as a condition of purchase.
"They can market their new apps and generate more ideas and get them out there, and consumers can use them without this fear that they're violating copyright law when they do so," she said.
Cell phone providers were also dealt a blow by the Library of Congress. Used mobile phones can be unlocked so they can be used on other carriers' networks.
That change will open up a secondary market for discarded phones when a customer upgrades to a newer model and they can be worth $50 to $60.
But the CEO of Flipswap, which runs a re-use website, warns of a possible boomerang effect the next time you upgrade.
"Operators will find that the subsidies that they're putting in the phones, they will not subsidize to such a large extent, so you may find that the prices of phones in the stores goes up," Flipswap CEO Dave Stritzinger said.
One more ruling came out today, saying it's OK to lift video from DVDs for artistic purposes or reviews. The movie industry has fought hard not to foil that by using special coding.