A British firm's plan to sell software that could open the iPhone to non-US networks has been put on hold following legal threats.
The iPhone will launch in Europe later this year
Last week, Belfast-based UniquePhones joined several others in claiming it had cracked the code which locked iPhone into AT&T's network.
But a middle-of-the-night phone call from AT&T's lawyers has forced the firm to rethink its plans.
It will now take legal advice to assess the ramifications, the firm said.
According to UniquePhones, it received a 3am call from a lawyer claiming to represent AT&T and warning it that selling unlocking software could constitute copyright infringement and illegal software dissemination.
"A substantial delay caused by any legal action would render the unlocking software a less valuable commodity as well as creating unforeseen security issues for the company," UniquePhones said in a statement.
Interest in the iPhone, Apple's first foray into the mobile world, has been intense since it was launched in the US in June.
On Friday it was reported that a 17-year-old US hacker had unlocked the iPhone and used it on rival T-Mobile's network.
George Hotz said that the method he used took two hours and involved both tinkering with the software and some soldering.
A website called iPhonesSimFree also claimed to have cracked the code with a software solution that it would begin selling imminently.
Analysts believe Apple may still have time to modify the iPhone to tighten its locks before the phone is launched in Europe.
Any reported cracks would have ramifications for Apple's European partners which, it is rumoured, the firm may announce at IFA 2007, a consumer electronics show being held in Berlin next week.
Tech blog Engadget thinks UniquePhone's should make their unlocking solution available to the public.
"Here's to hoping that, should UniquePhones not find themselves able to actually sell their software, at very least the unlock method they've discovered gets opened up to the public. After all, there's no reason why everyone shouldn't be able benefit from this knowledge just because one company isn't able to sell it," it said in a blog entry.