From: leichter@zodiac.rutgers.edu
Newsgroups: alt.security
Subject: Re: Legalities re: new encryption program
Date: 1 Sep 92 18:16:38 GMT
Distribution: usa
Organization: Rutgers University Department of Computer Science

In article <1992Sep1.025415.9098@ee.eng.ohio-state.edu>,
butzerd@blanc.eng.ohio-state.edu (Dane C. Butzer) writes:
| First of all, even though I'm sending this posting through OSU (where I'm a
| graduate student), I'm making it in my capacity as a partner in an
| independent company - we don't have internet access yet...

| This posting is a request for some information from the security world out
| there.  Basically, we'd like to find out what legal requirements/hurdles
| exist for the sale of a new data encryption algorithm.

| More specifically, we've developed a data encryption program based on a new
| type of random number generation.  This generator produces a stream of
| numbers with the following basic properties:  1)  The cycle of repetition is
| at least 10^34 (ten to the thirty-fourth).  2)  The correlations between any
| sections of the numbers is statistically zero (with a very high level of
| confidence).  3)  2^128 (two to the one hundred twenty eighth) different
| number streams can be generated (ie. there are 2^128 different keys).
| 4)  Changing the key be even one bit is guaranteed to change over 99% of the
| numbers.  5)  The cross correlations between each different number stream is
| almost zero. (With a normalized correlation of 1 being complete correlation,
| and a sample size of 8000 numbers, the typical correlation values are around
| 0.01; sometimes they are as high as 0.05, and sometimes they are as low as
| 0.00001).

| The applications for such a generator in encryption are obvious.

On the contrary.  What's obvious is that you know nothing about cryptography.
Not ONE of the assertions you list above has any real cryptographic signifi-
cance.  Cycle length is interesting only if it is too short; the difference
between a cycle length of 10^34 and 10^20 is essentially nil, in and of
itself.  Similarly, the number of keys is of no significance once it is large
enough to avoid brute-force search - 2^64 is certainly fine today, 2^80 is
probably beyond any conceivable brute-force attack.  Sensitivity of the output
to one-bit changes in the key is an incidental effect of no great significance
(again, in and of itself).  Correlation analysis is absolutely irrelevent.
For example, well-chosen linear congruential random number generators have
very good correlation properties, but are completely worthless from a crypto-
graphic point of view:  One can "read out" all the data in an LC generator
from a few (three or four?) successive values.  (Correlation essentially tells
you how well you can predict using a linear approximation.  There is no reason
to suppose your attacker will choose to limit himself to linear functions.)

|								    Now, we're
| curious about the legal side of selling something like this.  Are there
| special certification, registrations, etc. that have to be taken care of?
| Can such a program even be distributed/sold legally?  Will we get squashed
| by the government (Agents burst into the apartment and take everything at
| bazooka point ;-> )?

There are, in general, no limitations or restrictions on sale WITHIN the US
(and Canada, I believe).  Export, however, is very tightly controlled, and
will require a license, nominally from the State Department.  Such licences
are quite difficult to obtain.

If your technique is good enough, the government MIGHT seek to supress it.
(The usual way this comes up is that you file for a patent on your technique,
and the government then slaps a secrecy order on it.)  Frankly, based on
your vague description, you probably have nothing to worry about.

| Also, we're thinking about distributing a free copy of a limited version of
| the program for the internet world to try out.  This version would only be
| able to encrypt files of size 10k or less, would be time-bombed (ie. die off
| after a certain date), and would probably not incorporate the most efficient
| implementation of the generator (ie. it would be slow).  We're also thinking
| about releasing an encrypted message and most of the corresponding clear
| text, with a fee of $500 offered to whoever can "break" the encryption first
| (This is just an idea right now - the rules to such an experiment would have
| to be spelled out in detail - not something to bore you with now.)  Any
| comments on the legality/risks involved with doing this?

You cannot export encryption code without the proper license.  Placing the
code on a publically-accessible server which can be accessed from outside the
US and Canada counts as export.  The way this has been handled by companies
like RSA is to provide the software only by Email, and only after the recipi-
ent has signed an appropriate license (in which they agree not to export the
software, among other things).

Frankly, your challenge is a waste of time.  I can come up with any number of
worthless cryptographic schemes that would survive an attack of the sort you
posit.  You could certainly use the results for publicity - people use all
sorts of worthless things for publicity - but no one with any background in
cryptography would consider them worth anything.  The only kind of validation
that would be worth anything would come from publishing the algorithms and
letting the experts try to attack them for a couple of years.  If they survive
that, they might be of interest.

Summary of advice:  If you seriously want to build a business, consult some
experts.  Talk to lawyer about legal restrictions.  Talk to some people who
do cryptography about cryptography.  This (well, certainly the first part -
but the second, too, if you want quick answers to your particular questions)
will cost you some money.  That's why businesses need starting capital.

							-- Jerry
Xref: sparky alt.security:4246 comp.security.misc:1149