SOFTWAR Exclusive Interview With Jim Bidzos


James Bidzos is the Chairman of RSA INC. the largest US encryption firm. In 1994, Bidzos met with Commerce Department officials in a US Government attempt to purchase RSA patents on Digital Signatures. Later, in 1995 and 1996, Bidzos traveled to China, and finally signed a "Memorandum of Understanding" with the Chinese Government on encryption. Finally, in April of 1996 RSA merged with Security Dynamics of Massachusetts.

BIDZOS: Hi Charles- I'll try to answer your questions.

SOFTWAR: I have spoken with Michael Rubin of NIST and to be frank, his reaction to your name was somewhat harsh. Tell me about your meetings with the US Government to purchase RSA digital signature patents and what was it you did or said that caused such a negative reaction?

BIDZOS: I think they remember this as a bad experience because it failed. NIST came to terms on the DSA patent licenses, then published them in the federal register. However, several foreign governments objected for a number of reasons, and NIST took most of the blame for having entered into any deal at all. (I think some of the foreign govts did not like the fact that they and their companies would pay for the use of DSA while the US Govt itself would have royalty free use.) Rubin was associated with all this, and it may have hurt his career. Being a bureaucrat, this would anger him.

SOFTWAR: What past experiences and other techniques do you have to shake up so many people in government and among your competitors?

BIDZOS: I think my negotiating skills are highly overrated. We have over 400 licensees who had no problem getting RSA licenses. Many people simply do not like the fact that such inportant technology must be paid for; I am the face they see, so much of their frustration is directed at me. I also suspect that many people in the crypto business are jealous of our success. Maybe I just do a good job of realizing value for RSA shareholders. (See next answer.)

SOFTWAR: Security Dynamics is reported to have paid $200 million to merge with RSA.What makes RSA worth so much?

BIDZOS: It is a matter of record that SDI gave the shareholders of RSA 8 million shares of SDI stock. (It was 4 million at the time of the merger; it has since split 2 for 1.) At today's price of 37, that is $296 million. RSA is a very valuable brand name, has good technology, excellent people, and RSA has a valuable customer base and relationships.

SOFTWAR: I recently tried to talk with the FOIA officer at NSA on digital signatures and got a VERY rude (and possibly illegal) reaction. What is your opinion the NSA?

BIDZOS: I suspect NSA is very good at what their primary job is - intelligence gathering - but not very good at marketing or dealing with the public. I think they were unable to deal successfully with the software industry because of their closed-world, secretive mentality.

SOFTWAR: When did you meet with Vice President Al Gore during the government bid to buy RSA patents on Digital Signatures?

BIDZOS: I did not meet with Al Gore on this; only Ginger Lew and 4 other lawyers, but they did say they were there on his authority. It was in early 1994, in March, I think.

SOFTWAR: Have you ever met with Janet Reno? John Huang? Ginger Lew? Ira Sockowitz? Ron Brown?

BIDZOS: No to all of the above.

SOFTWAR: Do you think the Clinton administration shipped Clipper systems to China? Do you think this export was an accident or intentional?

BIDZOS: I know nothing about this, and have not heard of it until now.

SOFTWAR: What do you think about Dr. Perry now being an executive of Cylink - which also claimed to build Clipper hardware?

BIDZOS: I don't believe that Perry is an executive of Cylink. I heard he had joined their board of directors, but I also heard that he immediately resigned. However, these are rumors I heard, and I have no facts concerning his involvement with Cylink, and have no opinion about it.

SOFTWAR: Did you ever meet with Mr. Foster, Mr. Nussbaum or Mr. Hubbell?

BIDZOS: Never.

SOFTWAR: Have you ever met Bill Clinton or taken one of those "infamous" White House calls?

BIDZOS: I met Clinton for the first, and so far only, time a week or two ago, where I was invited to join a dinner where encryption was one of the main topics. I have never been telephoned by Clinton, or anyone in the administration, or the DNC, about contributions.

SOFTWAR: What do you know about Mr. Sanford Robertson and his firm Robertson and Stephens?

BIDZOS: I know they are successful investment bankers who were acquired by Bank of America.

SOFTWAR: I understand you first met Mr. Stuckey in late 1992 - Can you tell me when and where?

BIDZOS: I acutally first met him in 1987 or 1988, at various computer security trade shows.

SOFTWAR: Has the government ever pressed you about your work at RSA and your greek heritage? For example, did they express concern about your ownership of so much of RSA and sensitive contracts?

BIDZOS: No, Greek heritage has not been an issue. (The current CIA director is of Greek heritage.) RSA does not do "sensitive contracts." We have never done any sensitive or classified work for the govt. None of our revenue comes from the govt, except for a negligible amount of software sales to some agencies who buy from us just like any other customer.

SOFTWAR: I understand you were in the US Army - When, and what did you do?

BIDZOS: In the early 1970's for 2 1/2 years. I served mainly in the Far East. I did not, and never have, had a security clearance.

SOFTWAR: You signed a deal with LOIS and the China Academy of Sciences in Feb. of 1996. Exactly what encryption is involved (e.g... source code, object code, executable, theory)? Was a license required from the Commerce Dept.?

BIDZOS: The deal was a Memorandum of Understanding, with LOIS and MOFTEC. (Ministry of Foreign Trade and Economic Cooperation.) It does not involve any source code, and only applies to products which may be legally exported to China. (Such as "authentication only" products.) To date, nothing has been delivered, although we have done some joint research between our scientists and some LOIS mathematicians.

SOFTWAR: What do you think of going to a nation such as China to discuss advanced technology which could be used against dissidents?

BIDZOS: I think it is a good idea for the US Govt and for people in the US to exchange visits and idea with China, and to learn what's going on, and to express our views to them. We have not provided anything to China that can be used against dissidents.

SOFTWAR: What do you think of the Senate Campaign finance hearings (Thompson) NOT covering encryption exports to China and the Clinton administration?

BIDZOS: I have not followed these hearings closely, and I am not aware of any crypto exports coming up in them. Maybe I did not understand your question?

SOFTWAR: Thank you for your answers. FYI - Here is a couple of snips from the GAO report on HUA MEI - Export Controls: Sale of Telecommunications Equipment to China (Letter Report, 11/13/96, GAO/NSIAD-97-5). I would be interested in any comments or if you want the entire report I can send it to you.

BIDZOS: No comment really, I don't follow this stuff much. I've been very busy dealing with various bills in Congress regarding domestic encryption controls.

SOFTWAR: Could I follow up with one more question? When did you meet with Al Gore and if you did, were any of the meetings on official business?

BIDZOS: No problem, glad to help. I have never met personally with Al Gore (nor have I ever spoken with him on the phone), only govt reps (Ginger Lew) who claimed to be meeting me on his authority.

SOFTWAR: Once Again - Thank you very much!

BIDZOS: Good luck!

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