From Bidzos' perspective, Washington remains bound up in a cold war mentality, and should simply get out of the way and let RSA Data go about its business. What is more, he complains, any number of foreign companies are developing encryption techniques just as hard to crack as his, so the government's efforts to keep him from exporting his software are useless, and
Here's something to put in your FYI files... 6/28:PROFIT AND EGO IN DATA SECRECY By JOHN MARKOFF c.1994 N.Y. Times News Service REDWOOD CITY, Calif. - If the web of thousands of computer networks around the world can be thought of as an information superhighway, then Jim Bidzos is one of its best-placed toll takers. Bidzos expects to become very rich - unless the government has its way. As president of a Silicon Valley company called RSA Data Security Inc., Bidzos, 39, controls the patents for software crucial to scrambling and unscrambling computer messages so they can be sent confidentially. Just about anyone using a computer network - whether for sending personal messages, filing taxes electronically, or shopping from home with a credit card - would want such confidentiality. On the strength of its coding technology, RSA has sold more than four million copies of its software, and it has won wide support from industry giants like Apple Computer, AT&T, IBM, Lotus Development, Microsoft, Motorola, Northern Telecom, Novell and Sun Microsystems. Until recently cryptography, the science of sending secret messages, was a province generally populated by the armed forces, governments and their spies. But with the rise of commercial computer networks, cryptography has become an essential ingredient in information-age services. RSA's software is based on an innovation in cryptography that permits people to exchange private messages without actually getting together beforehand and arranging a secret password. In the past, cryptography required that the two parties to a communication first meet to exchange a large number that enabled them to encode and decode messages. RSA's system employs two keys, one for encoding a message, known as a public key, and another for decoding it, called a private key. People who wish to receive secret messages can freely distribute their public key, which enables senders to encode a message. Only with the private key can the message be decoded. A company selling products on-line, for instance, might make its public key widely available, which would enable customers to send in a coded message containing their credit card numbers that could not be intercepted and read by others. The company could decode those messages with its private key, which has a mathematical relationship to the public one. The government fears that should the RSA system become available abroad, it would lose its ability to eavesdrop and wiretap in cases involving risks to national security. It would much prefer that the global standard be based on its own Clipper encryption standard, which has a "backdoor" that law enforcement officials can peek through. Precisely because the RSA method has no backdoor, it is the choice of industry. But to some government officials, Bidzos is nothing short of a scheming businessman. "The government would like him not to exist," said Jeffrey Schiller, a computer manager at Massachusetts Institute of Technology, who has negotiated a licensing deal with Bidzos. And Stuart Baker, who until several weeks ago was chief counsel of the National Security Agency, observed, "My sense is that his motivation is no more than trying to convince people to buy his products." Officials at the National Institute of Standards and Technology, another federal agency, say they want to create a standard that is not beholden to the patents of one small company. And the National Security Agency and the Justice Department want a standard that will allow law enforcement agencies to eavesdrop on suspected criminals or violators of national security. perhaps counterproductive. Notwithstanding the official concerns, RSA has developed a loyal following among a wide range of computer, communications and software companies. "They have the strongest technology and the best reputation in the cryptography business," said William Ferguson, vice president of Semaphore Inc., a maker of data-scrambling systems that licenses RSA's software. Adding spice to this dispute is Bidzos' ability to outmaneuver the government, most recently by snatching a crucial patent from under the noses of officials who were planning to use it in an official standard they are trying to establish. Several years ago, two top computer scientists from the National Institute of Standards and Technology traveled to Europe to meet with a German mathematician, Claus Schnorr, who holds a key patent that the government's coding system may violate. When they returned to the United States, the scientists told their superiors that the United States should license Schnorr's patent. But Washington was slow to act. So in March 1993, while Bidzos was on a trip to France, he met with Schnorr for a four-hour lunch. By the end of the meal, Bidzos had a deal to use Schnorr's patent. Despite Bidzos' high profile in the world of encryption, RSA's revenue is small - somewhere between $5 million and $10 million annually. But analysts say that the company has the ability to grow substantially. "They have a huge opportunity in the Internet," said Lisa Thorell, a researcher at Dataquest in San Jose, Calif., referring to the global web of computer networks that is regarded as a working but primitive model of a global data highway. RSA is also playing an increasing role in the $500 million secure-communications business for equipment that permits safe financial transactions and voice and data communications. The issue clouding the future of the company is how severely it will suffer from export controls and competing standards backed by the National Security Agency. Last month the government made its own competing standard for signing electronic documents mandatory for all federal agencies, and declared that the digital signature standard, as it is known, did not violate RSA's technology. Bidzos thinks that Washington is infringing his patents, and, eventually, the strength of his patent claims will be tested in court. Rather then sue the government, Bidzos is likely to start with one of the small companies, like Group Technologies Corporation in Tampa, that is making components under a government contract, industry executives say. Bidzos, who is a Greek citizen and a permanent resident of the United States, was working at a small international marketing firm in 1985 when he decided to move from Florida to the Silicon Valley to help a friend save a failing business. "I wanted to do deals and stay in luxury hotels," he said recently at his office here. "I had no idea I'd be in the center of a political whirlwind." When Bidzos joined the company in 1986, RSA was a shoestring operation about to go into bankruptcy. With his help, RSA struck a deal with Lotus Development in 1987, in which the software giant agreed to advance money for the right to include RSA software in Lotus Notes, a program designed for work groups of office employees. A year later RSA was presented with an offer to be acquired by Rupert Murdoch in a multimillion-dollar deal. A Murdoch subsidiary, the News Data Communications Corp., was developing technology for Murdoch's Sky TV. So in 1988 Bidzos flew twice to Britain to attempt to negotiate a deal, but the sides were far apart on price. He says the offers to buy RSA still roll in. "I've received no less than five firm, written offers in the last two years," he said. He also says he doesn't think that the government can regain the upper hand in the cryptography wars. "They've fired every weapon they have at us now, and we're stronger than ever," Bidzos said. "All they can do is try and get RSA legislated out of business, and that will never happen, in my opinion."