Eucalyptus is the name of an e-book reader app for the iPhone. It allows you to read public domain books that have been digitized by the volunteers at Project Gutenberg. Apple has rejected Eucalyptus for inclusion in the iTunes App Store because one of the books archived at Project Gutenberg, and thus readable in Eucalyptus, is a Victorian-era translation (just text!) of the Kama Sutra, the ancient Indian compendium of practical information about sex. Since Apple takes technical measures to prevent iPhone owners from running any software not "approved" by Apple, all iPhone owners are denied the benefit of Eucalyptus simply because a prudish Apple reviewer is scandalized by the words "lingam" and "yoni."
This is just the latest example of the many problems with Apple's App Store approval process, which has been revealed to be frequently anti-competitive, discriminatory, censorial, and arbitrary.
Apple defends its "approved apps only" policy on paternalistic grounds -- they are protecting you from "bad" apps. But recent information casts doubt on whether Apple's approval process actually protects iPhone owners -- it looks like Apple may not be doing thorough security testing of all of the thousands of apps submitted. For example, one developer found he could bypass Apple censors by putting "easter eggs" in menus that Apple failed to examine. And the developer of iCall testified before the Copyright Office that, even after months under submission, Apple did no meaningful testing of the iCall app before approving it.
Despite the mounting evidence that Apple's policies are bad for competition and consumers (at least those that want apps like Eucalyptus, or Skype or Sling Player over 3G, or the ability to take video with your iPhone's camera), Apple nevertheless maintains that "jailbreaking" your own iPhone in order to run applications of your choosing is a violation of the DMCA.
And that's why EFF has asked the Copyright Office to grant an exemption to the DMCA for jailbreaking iPhones. It's none of Apple's business if I want an app on my phone that lets me read public domain books (including the Kama Sutra).
UPDATE: Thanks, no doubt, to the bad press this generated for Apple, it now appears that Apple has changed its mind and has given Eucalyptus the green light. Wonder how many others app developers haven't been so lucky?