While the courts have been busy making decisions about digital rights, Washington has also been having its say on copyright law, at least as it relates to the iPhone and other handsets. Key new rules arrived Monday morning.

Most notably, the FCC has made the controversial practice of “jailbreaking” your iPhone — or any other cell phone — legal.

Jailbreaking — the practice of unlocking a phone (and particularly an iPhone) so it can be used on another network and/or run other applications than those approved by Apple — has technically been illegal for years. However, no one has been sued or prosecuted for the practice. (Apple does seriously frown on the practice, and jailbreaking your phone will still void your warranty.) It’s estimated that more than a million iPhone owners have jailbroken their handsets.

Apple fought hard against the legalization, arguing that jailbreaking was a form of copyright violation. The FCC disagreed, saying that jailbreaking merely enhanced the inter-operability of the phone, and was thus legitimate under fair-use rules.

The upshot is that now anyone can jailbreak or otherwise unlock any cell phone without fear of legal penalties, whether you want to install unsupported applications or switch to another cellular carrier. Cell phone companies are of course still free to make it difficult for you to do this — and your warranty will probably still be voided if you do — but at least you won’t be fined or imprisoned if you jailbreak a handset.

In addition to the jailbreaking exemption, the FCC announced a few oth er rules that have less sweeping applicability but are still significant: