Administration Buys Off EES Patent Holder (fwd)

[Stanton McCandlish <mech@eff.org>]

Date: Mon, 11 Jul 1994 14:53:56 -0700
From: "Brock N. Meeks" <brock@well.sf.ca.us
To: com-priv@psi.com
Subject: White House Pays
 
CyberWire Dispatch // Copyright (c) 1994 // July 11 //
 
Jacking in from the "Blank Check" Port:
 
 
Washington, DC -- The Administration will today announce it has
sidestepped the threat of patent infringement lawsuit involving its Escrow
Encryption System, commonly known as Clipper.  The solution: Toss the
original patent holder a blank check and buy him off.
 
The National Institute of Standards and Technology (NIST), the agency
walking point for the White House on its proposed encryption Clipper
encryption standard, has agreed in principle to license two key patents
relating to the technical workings of the key escrow system from patent
holder Silvio Macali, an MIT professor.
 
The government's key escrow system depends on the capturing of digital
"keys" that allow authorized law enforcement officials to unscramble
Clipper encoded speech or Capstone encoded data, including electronic mail.
Macali, as it now turns out, thought up the idea and had the moxy to patent
his scheme.   Macali's inventions detail the process whereby a digital key
is divided into pieces.  Those pieces are then held by separate "key escrow
agents" which now turn out to be hand picked government agencies;  one is
NIST the other a division of the Treasury Department.  Those keys must be
combined to successfully unlock the code that allows law enforcement
officials to listen in.
 
The license agreement effectively eliminates "concerns Macali raised about
possible infringement of his patents," said NIST spokeswoman, Anne Enright
Shepherd.  It also sidesteps a potentially ugly lawsuit in which Macali
lawyers could have uncovered all sorts of currently  unknown information
about the Clipper program.
 
According to sources familiar with the negotiations, the government's
agreement with Macali grants the Administration a nonexclusive license to
the patents for use in current implementations of Clipper and Capstone and
for future implementations, Shepherd said.
 
It's not known whether the government will make a single payment to Macali
or pay royalties.  "The procurement phase of the agreement is still
continuing," Shepherd said.  Disclosure of the amount paid to Macali and
details of the license agreement are expected to be made public sometime
early next month, she said.  That agreement, however, wont result in any
user fees, Shepherd said.
 
Questions Raised
================
 
Although the government's action today nullifies a pesky problem, it also
continues to raise serious questions about the Administration's --  and
more pointedly -- about the National Security Agency's ability to ramrod an
encryption policy that has been elevated to the status of a national
security issue.
 
Surely the NSA or NIST can dial up the U.S. Patent Office and query its
database, looking for patent conflicts.  Apparently the clock and dagger
crowd was too busy with other matters.  Arrogance or oversight?
 
"Macali made the existence of his patents known during the public comment
period," Shepherd said. "He let the government know he had some patents
that he felt were similar to some technology used by the key escrow system.
So the discussions kind of began at that point," she said.
 
Unfortunately, the "public comment" period was launched only after the
White House trotted out its Clipper policy as set in stone.  Nobody
expected Macali to piss the parade.
 
Privacy and civil liberties groups have roundly criticized the government
for developing Clipper in secrecy, not allowing public debate on the issue.
If that debate had taken place, Macali would have come forward years ago.
 
Despite the Administration's continued efforts to push Clipper into the
deep waters of the mass market, there are rumblings that it may not be
christened after all.  At very least, it may not be the only encryption
standard blessed by the government.
 
Several groups are now floating their own alternatives to the Clipper
program.  And although the National Security Agency is working behind the
scenes to sink such efforts, NIST, at least, is making the appearance of
listening.
 
Earlier this year, NIST put out a call for the Cooperative Research and
Development Agreement (CREDA), which was an effort to draw publicly
interested parties into a cooperative venture to develop a key escrow
alternative.
 
Those that came forward have now thrown off working formally with CREDA,
but have instead formed their own working group, government sources said.
Those efforts are being heard and taken seriously, according to several
government sources familiar with the discussions.  "Encryption isn't a
front page issue, but those [inside the Administration] working on this
issue are tired of being beat up over it," said a White House official.
 
Discussions on Clipper alternatives "are continuing," Shepherd said.  "And
we're still open to other alternative ideas and we're working with the
people who have presented their own ideas at this point."
 
Meeks out...