While most developers won’t hesitate for a moment to sign Apple’s iPhone Developer Program License Agreement in blood to have even a piece of the App Store action, a new legal analysis reveals some disturbing reasons as to why you might want to think twice.

The Electronic Frontier Foundation has gotten their hands on a copy of Apple’s iPhone Developer Program License Agreement and have distilled a few choice nuggets which should give most developers pause before they drink the Kool-Aid, as it were. Thanks to the existence of the NASA iPhone app, the EFF was able to use the Freedom of Information Act to ask the space agency for a copy of the license agreement dated March 17, 2009, and here’s some of what they discovered.

Section 10.4 of the agreement “prohibits developers, including government agencies such as NASA, from making any ‘public statements’ about the terms of the Agreement.” The EFF finds this section “strange,” noting that the Agreement itself is not “Apple Confidential Information” as defined in Section 10.1 -- meaning that “the terms are not confidential, but developers are still contractually forbidden from speaking ‘publicly’ about them.”

Section 7.2 makes it clear that if you use the iPhone SDK to develop your app, you can’t sell it anywhere but Apple’s own App Store. All well and good, unless your app should get rejected -- meaning you are then prohibited from distributing it through Cydia or Rock Your Phone, both available for jailbroken devices.

Section 3.2(e) was widely reported on when first added last year, which essentially bans jailbreaking to begin with. But it doesn’t stop there: The EFF notes that “it appears to prohibit developers from tinkering with any Apple software or technology, not just the iPhone, or ‘enabling others to do so.’” That could preclude iPhone developers from making iPods work with open source software, for instance.

Section 8 is one of the more draconian: Apple can “revoke the digital certificate of any of Your Applications at any time.” Yes, that means that Apple essentially has a “kill switch” built into the App Store and they can remove your app from it at any time.

Finally, Section 14 states that, “no matter what, Apple will never be liable to any developer for more than 50 dollars in damages.” That’s right: Apple has developers by the short hairs to begin with, but if they should happen to trip you up in any way, “the Agreement tries to cap you at the cost of a nice dinner for one in Cupertino.”

The entire iPhone Developer Program License Agreement is available for download as a PDF on the EFF website.