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RE: RC2 Licensing

1997-04-15 17:42:59
I would like to know what the licensing fee will be after
RC2 has been accepted as a standard compression algorithm 
for the S/MIME standard.  I fear that vendors such as 
myself would be at a significant risk in this event unless
there were open alternatives as part of the standard.

On a slightly different but equally relevant note,
RSA already has proposed a per unit royalty for use of
their algorithms.  Companies such as Netscape and Microsoft
can afford to buy out a license with lots of cash
or stock.  Companies such as Tumbleweed Software cannot
and hence will have trouble competing, particularly
given some of the new business models in place for
internet distribution.  Importantly, in some respects,
Netscape and Microsoft have incentives to support the
RC2 standard as it acts as a barrier to entry into
the S/MIME market for less capitalized companies.

By analogy, although this is not an officially
sanctioned standard, PDF is an open trade mark --
Adobe does not own it; they only own the mark
for Acrobat.  And Adobe changed the Acrobat PDF 
format in the 1.2 version to remove any proprietary
compression algorithms.  The legacy issues with PDF
1.1 and 1.0 documents due to proprietary compression 
algorithms will be around for some time. And in this
case, the cost of the license to these proprietary
algorithms increased with the proliferation of the

In short, small internet start-up companies are
vulnerable today and will become more vulnerable
tomorrow with the existing proposal for RC2. Of
course the trademark issue is significant as well.

Jeffrey C. Smith
CEO, Tumbleweed Software

At 12:23 PM 4/15/97 -0700, Laurence Lundblade wrote:
Steve, I know this is a delecate subject, but I'm not at all sure that the
domestic issue is moot.  There is certainly a community of free and
share-ware developers that don't have access to RC2 now that would probably
like to have access to it.  The question is how important is that
community. There are still large segments of the Internet e-mail community
that use freeware like Pine. In fact I believe the most UNIX internet
e-mail is freeware based as there are few commercial products.  This may
become an issue as folks try to deploy S/MIME.

I'm also not sure that the IETF views this issue as moot. I don't recall
the discussions at the BOF being qualified as domestic versus
international. My understanding was that any technology that was encumbered
indefinitely was a problem.


At 11:11 AM -0700 4/15/97, Steve Dusse wrote:
Hi Walt,

RSA's official position on RC2 is that it is a trade secret and that any
implementation of RC2 anywhere in the world, other than the copyrighted
code in RSA's software toolkits, was derived from RSA's toolkits
illegally (e.g. via reverse engineering or otherwise).

We are working very hard to come up with a licensing scheme that is
acceptable to everyone (an oxymoron of sorts...) for use in S/MIME.
Most of the US e-mail vendors have already licensed this technology so
the issue domestically is fairly moot.  Internationally, we have a much
greater challenge, how to get RC2 technology legally to overseas S/MIME
developers in toolkit form.  Not an easy task.  Suggestions are welcome.

Steve Dusse

Sent:        Tuesday, April 15, 1997 8:13 AM
To:  smime-dev(_at_)RSA(_dot_)COM
Subject:     RC2 Licensing

Lindsay Mathieson asked the question regarding the licensing issues of
RC2 (or other RSA algorithms) outside of the RSA toolkits (i.e. using
the crypl200 library).  If there was a response, can you please repeat
it.  I seemed to have missed it.

Walt Boland

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