News on RSA vs. Cylink Injunctions and Patents

["baldwin" <baldwin@RSA.COM (Robert W. Baldwin)>]

        The following press release from RSA may be of interest to the
folks on this list.
                --Bob
-----------------------------------
Subject: NEWS: Cylink loses in attempt to enjoin RSA licensing

REDWOOD CITY, Calif.--(BUSINESS WIRE)--March 8, 1996--In a ruling filed 
March 4, the Honorable Spencer Williams, U.S. District Court Judge for the 
Northern District of California, denied Cylink Corporation's motion seeking 
an injunction against RSA Data Security, Inc.'s licensing of its 
BSAFE/TIPEM toolkit software.  


Cylink contends that RSA's software infringes its Stanford patents and that 
licensing required an additional grant from Cylink, despite 
the fact that RSA already has a license.  After hearing oral arguments on 
Feb. 29, Judge Williams denied Cylink's motion from the bench and later 
issued a written order explaining that "several factors weigh against 
finding that (Cylink) has shown a likelihood of success on 
the merits."  


In denying the motion the court found that "RSA has raised serious question 
(sic) regarding the validity of the first of the Stanford patents, the 
Diffie-Hellman patent."  With respect to Cylink's other patent, the 
Hellman-Merkle patent, the court had this to say: "(I)t is questionable 
whether the patent warrants such broad coverage."  Thus, Cylink has "failed 
to demonstrate a likelihood of success on the merits."  


RSA had initiated the lawsuit against CKC, a wholly 
owned subsidiary of Cylink, because CKC was threatening RSA's customers in 
an effort to induce them to purchase sublicenses to the Stanford patents.  
RSA's action seeks a court determination that the patents are invalid, not 
infringed and/or RSA's licensing does not exceed its existing rights under 
the patents.  Cylink/CKC responded by filing its motion for preliminary 
injunction which was denied by the court as described above.  


In a related matter, the arbitration panel which is handling the winding up 
and dissolution of Public Key Partners ("PKP"), the entity that formerly 
held the licensing rights to the MIT and Stanford patents, ruled that:  "In 
addition to the claims discussed above and in our prior rulings, Cylink 
presented the claim, but did not prove, that RSA breached its fiduciary 
duty to PKP by providing patent licenses to third parties."  The 
arbitration panel also found that PKP was obligated to reimburse RSA for 
the costs and attorney's fees incurred in other related litigation, 
including a patent lawsuit brought by Cylink to invalidate the MIT patent.  


"The court confirmed that RSA has existing rights to the Stanford patents, 
and although Cylink knew this, it has forced RSA to investigate.  In that 
process, we have found a number of disturbing facts about the Stanford 
patents," said Jim Bidzos, president of RSA. He went on to add: "Cylink's 
losing its motion is likely only a surprise to Cylink who thinks they can 
achieve through the courts what they haven't been able to accomplish in the 
marketplace."