29 August 1997
Source: Vin McLelland <vin@shore.net>

For related documents see: http://jya.com/rsavpgp-files.htm

Date: Fri, 29 Aug 1997 18:46:46 -0500
To: John Young <jya@pipeline.com>
From: Vin McLellan <vin@shore.net>
Subject: <fyi> Cylink Withdraws Claims in RSA v. PGP

G'day John:

	FYI. RSADSI yesterday posted a brief letter from Robert Fougner,
Cylink's General Counsel -- also, President of Caro-Kann Corporation, the
Cylink subsidiary which was RSA's partner in the now-defunct Public Key
Partners (PKP) -- on its website at: http://www.rsa.com/html/cylinka.html

	You will want add it to your collection of documents and exhibits
relevant to the RSA/PGP suit. (RSA posted a GIF of Cylink letter. I append
my retype of the text below.)

	The letter is terse, so some context might be useful to your
readers. In this letter, Mr. Fougner conceeds that his earlier statements
challenging RSADSI's right to independently, for cause, terminate PGP's
license to use RSA's public key technology -- widely circulated by PGP
executives (see Exhibit A at: http://jya.com/rsavpgp2.htm ) -- were
inappropriate and in error.

	(You might also leave an open slot in your document collection for
the still-secret 12/31/96 settlement agreement between RSADSI and Cylink,
when Cylink finally capitulated in its long and bitter PKC patent fight
with RSA.  Note Cylink's insistence in PGP's "Exhibit A"  letter that the
confidential portions of that settlement must be kept secret in all
circumstances.) According to RSA's initial filing in the PGP case, Cylink
had agreed in December that RSA would have the "sole authority to enforce"
PKP's license agreements with regard to the RSA Patent.  The RSA/Cylink
agreement apparently also had a provision for mandatory arbitration of any
disputes arising out it.

	In June -- after Fougner and other Cylink lawyers began their
campaign to interject themselves and the Cylink into RSA's dispute with PGP
Inc. -- RSA demanded arbitration to get an opinion on Cylink's newly
expansive interpretation of their settlement agreement.

	In the late July, the arbitrator reportedly issued an opinion on
Cylink's demand for a role in any RSA/PGP license negotiations that address
the termination of an RSA license for PGP Inc.  In a secret ruling, the
arbitrator is said to have completely endorsed RSA's interpretation of its
responsibilities and rights to unilaterally manage and enforce all PKP/RSA
licenses.  The letter from Fougner to RSA -- a small meal of crow -- was
the concrete result of that decision, apparently at the order of the
arbitrator.

	Back in June, when RSADSI turned to arbitration to deal with
Cylink, RSA and PGP together stipulated to a delay -- while the Cylink
claim was arbitrated -- in the California Superior Court action which
RSADSI had initiated in May to get a Declaratory Judgment on its right to
terminate the RSA license held by PGP.

	That case is presumably once again active.  Given the nature of
RSA's charges against PGP (See: http://jya.com/rsavpgp.txt), the Cylink
angle was always something of a sideshow, despite the prominence PGP Inc.
gave it in their PR and at the core of their legal response to RSA.

	Fougner's letter -- published by RSA without any mention of
Cylink's long and nasty lawsuit against RSADSI; the December settlement
agreement; or Fougner's recent attempts to run interference for PGP Inc. --
is dry and cryptic.  Fougner simply declares RSA's position as fact and
truth. In a small preface, RSA makes only an oblique reference to Fougner's
earlier comments and  letters, and other Cylink efforts to influence the
RSA/PGP dispute. (Most of the websurfers who come upon it won't have the
faintest idea what it's all about;-)  RSA jumps it off the splash page of
their website with the gripping headline: "Cylink Acknowledges RSA's
Rights."

	But what it means is that PGP Inc. is on its own in Court.

	Now, the San Mateo judge will get to address the question of
whether PGP Inc. became a valid licensee of RSADSI, by virtue of its
lawyerly shell-game with a few million in stock certificates.  [PGP Inc.
purchased Lemcom, a valid RSA licensee; then merged the two firms; and then
declared that only Lemcom, the RSA licensee (renamed PGP, Inc.), was the
surviving entity... with the officers of the old PGP Inc. now in charge.]
All the basic issues are again up for judicial review: whether RSA can
terminate the license for cause, or whether RSA must only seek termination
through an arbitration process; whether what PGP did or didn't do actually
violated the terms of the original RSA license.

	In considering these issues -- unless there is an out of court
settlement of some sort -- the California Superior Court will probably
decide whether or not RSADSI has a legal right and valid cause to strip PGP
Inc. of the RSA license under which it has commercialized PGP,  Zimmerman's
classic RSA-based freeware.

	Suerte,

		_Vin



-------Appended: Fougner Letter of 8/19/97------------------
<Source: GIF at: http://www.rsa.com/html/cylinka.html>

					CKC (/logo/)
					Caro-Kann Corporation
					August 19, 1997

TO WHOM IT MAY CONCERN:

	RSA Data Security, Inc. and Caro-Kann Corporation were the two
partners in Public Key Partners ("PKP").  This letter will confirm that PKP
has been dissolved and is now in the process of winding up.  This will
further confirm that, pursuant to an agreement of the two partners of PKP,
to the extent that an existing PKP licencee breaches or previously breached
(including during the existance of PKP) its license agreement with regard
to the MIT Patent (U.S. Patent No. 4,405,829), or a third party infringes
or previously infringed (including during the existance of PKP) upon the
MIT Patent, RSA has the sole and exclusive right to enforce such license
agreement or the MIT Patent.  RSA's exclusive right to enforce such license
agreement includes, without limitation, terminating such license agreement.

	Very truly yours,

	(/signature)
	Robert B. Fougner,
	President, Caro-Kann Corporation

    RBF/fnb

910 Hermosa Court
Sunnyvale, CA 94086-4103

408/735-5893
408/735-6642 FAX

[End CKC letter]


"Cryptography is like literacy in the Dark Ages. Infinitely potent, for
good and ill... yet basically an intellectual construct, an idea, which by
its nature will resist efforts to restrict it to bureaucrats and others who
deem only themselves worthy of such Privilege."
_ A thinking man's Creed for Crypto/ vbm.

 *     Vin McLellan + The Privacy Guild + <vin@shore.net>    *
  53 Nichols St., Chelsea, MA 02150 USA <617> 884-5548



[End VM letter]