The US computer industry has won a landmark victory in its efforts to overturn export restrictions on encrypted software after a judge decreed that source code is a language and therefore protected by freedom of speech guarantees.
In a 38-page ruling filed in San Francisco on 18 December, US District Court Judge Marilyn Patel decided that code is a form of speech and as such is covered by the terms of the First Amendment guaranteeing freedom of speech. "This court can find no meaningful difference between a computer language and German or French," she wrote.
But her ruling blew apart a fragile compromise deal brokered between the IT industry and the Clinton Administration to relax partially the US? tight restrictions on the export of encrypted software. Under new rules, due to come into force on 1 January 1997, suppliers can export some encrypted software for a limited period on the understanding that they develop a new technology that would give law enforcers access to scrambled data.
The compromise, announced in October, was grudgingly accepted by suppliers who had lobbied for complete relaxation of the US laws banning such exports, but behind the scenes discontent was still nurturing about what they saw as an infringement of their civil liberties as well as restricting commercial opportunities in a potentially lucrative market.
Patel?s verdict is not the end of the matter. To date, White House spokespeople have contented themselves with expressing ?disappointment? at the decision, but the Justice Department is certain to appeal against her judgment and a second hearing will be held sometime in 1997 in a bid to overturn the ruling.
Civil liberties groups and IT companies saw the Patel ruling as a major boost for their campaign against what they view as restrictive practices by the government. Jim Bidzos, chief executive of RSA Data Security, said it was the first rational ruling on the encryption issue and finally provided a level playing field for companies such as RSA.
The government can hardly have been surprised by the renewed demonstration of resentment from the IT industry that the Patel verdict prompted. The previous week, the Business Software Alliance, whose members include IBM and Microsoft, had fired off a warning shot in an open letter to vice president Al Gore in which it announced: "We seriously doubt that the [October compromise] regulations will work."
Nor can it have have been shocked by Patel?s opinion. In a previous ruling in April - before the compromise was reached with the IT industry - she decided: "Like music and mathematical equations, computer language is just that - language - and it communicates information either to a computer or to those who can read it. For the purpose of First Amendment analysis, this court finds that source code is speech."
Her second ruling in December came about as a result of a case brought against the Justice Department by Berkeley University mathematician Daniel Bernstein with the legal assistance of the Electronic Frontier Foundation civil liberties group.
In the early 1990s, Bernstein was a graduate student at Berkeley where he wrote an encryption program called Snuffle. In 1992, he discovered that Snuffle was covered by export restrictions in the International Traffic in Arms Regulations (ITAR). This sparked a war of correspondence between Bernstein and the government which ended up in court with the Patel ruling.
Patel said she had based her decision on a precedent set by the US Supreme Court in 1965 which determined that the government could only regulate speech under certain conditions. These are that it must make a quick decision in each case, it must open that decision for speedy review in the courts and that it had to come to court itself to prove the need for regulation in each case.
The judge said that when she compared these guidelines to the ITAR rules, it became clear that they failed on every count and were "a paradigm of standardless discretion".
The ultimate implications for the new export regulations remains to be seen. Even before the Patel verdict was delivered, government officials were making soothing noises in the direction of the IT industry, prompted by the BSA letter to Gore.
William Reinsch, undersecretary of commerce for export administration, said suppliers were making worst case assumptions about the form the regulations would take, when in fact officials were working hard to ensure that they implemented the principles agreed between government and industry.
He suggested that there was a cultural breakdown in communications resulting in tension between the two parties, arguing that: "Government speak and industry speak, particularly California industry speak, are often not the same thing."
The fear expressed by the IT industry side of the dispute is that the government?s real intentions are to return to a key escrow scheme, under which those using encryption technology would have to hand over a descrambling key to a state-approved third party. These keys could be obtained with a warrant by law enforcement agencies.
This approach is still favoured by the FBI and elements of the Justice Department, but the CIA broke the deadlock with the industry in October when it endorsed ?key recovery?, an IBM -driven system which made deciphering an encrypted message a two stage process. Law enforcement agents would have to use their warrants to get the cooperation of at least two outside parties, previously designated by the code users, to unscramble the code. Using this system, no single third party has a key to encrypted code.
In November, President Clinton transferred the review process for the compromise rules from the State Department, where opposition still rumbled on, to the more conciliatory Commerce Department in a bid to speed up their approval. By mid-December, 29 hi-tech companies had joined forces in an alliance to develop the necessary key recovery technology.
But the resentment at the new rules continued to bubble beneath the surface. The Patel ruling has changed the stakes. Any judgment in favour of Bernstein was bound to result in renewed opposition to any encryption export restrictions. As 1996 drew to a close, both sides were digging in for a long fight in a battle the government hoped had finally reached an armistice.
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