Thom Henderson, president System Enhancement Associates voice: (201) 473-5153 data: (201)

Thom Henderson, president
System Enhancement Associates
voice: (201) 473-5153
data:  (201) 473-1991


              Now That It's Over, What Did It Mean?

Now that the dust has settled in the first shareware copyright 
case, it is time for SEA to make public the facts that many 
members of the shareware community deserve to know.  

For the record, SEA is a family owned business.  Andy Foray, the 
company chairman, and Thom Henderson, the company president, are 
brothers-in-law.  Irene Henderson, the secretary/treasurer and 
office manager, is Andy's sister and Thom's wife.  

As the creators, publishers and defenders of the industry 
standard ARC file compression format, we have always maintained a 
strong belief in a fundamental concept of shareware -- that 
shareware be distributed for free for all non-commercial use.  To 
this end, we have never, and will never, charge for the use of 
ARC in a non-commercial environment.  We also believe that full 
program sources should be available, at least to registered 
users, and we have always made the full ARC sources available to 
all users.  We have also licensed a great many people to use the 
ARC sources in their own programs.  

We discovered that PKWARE had obtained our source code without 
obtaining a license.  He modified that code so that the program 
ran faster and provided several other enhancements.  However, the 
nuts and bolts of the program were done by SEA.  That is called 
PIRACY, plain and simple.  And this industry has no place for 
pirates.  

We tried to politely ask PKWARE to obtain a license.  He 
ungraciously told us where to go.  

We asked our lawyer what we should do.  He said we were bound by 
law to protect our rights to the trademark and copyrights on ARC.  
If we did not, then anyone could use the ARC trademark and 
copyrights.  It is very much like a candy bar calling itself 
Hershey.  If another company used the Hershey name without 
permission, you can imagine what would happen.  

Also, it should be noted that PKWARE did not live up to the high 
standards set by the shareware industry.  He didn't make his 
source code available.  He sought out our market and competed 
directly for our corporate market by using the funds he had 
received from non-commercial users (whom we would not charge!) He 
authorized ads with false and misleading comparison statements to 
run in the magazines we advertised in.  And he placed those ads 
on the same pages as our ads.  If we did not protect our 
investment in the ARC trademark, we would have lost our 
trademark, our market and our business.  Furthermore, the 
industry would have been left in disarray, as two standards would 
have emerged.  

So after Phil Katz told us he would not settle this case like a 
gentleman, we were forced to ask the courts to settle it for us.  

We didn't want to go to court.  We couldn't afford the lawyers 
fees.  We couldn't afford the time away from programming the 
updated versions of ARC that will work on other systems, such as 
Unix, Macintosh, and VM/CMS.  And we couldn't afford to create a 
controversy in an industry that we helped to pioneer.  We also 
couldn't afford to create ill will among users -- both our users 
and PKWARE users.  But PKware left us no choice.  

Anyway, the case didn't get very far, thanks to the testimony of 
an expert witness, John Navas.  He looked at the source code of 
both programs and found, lo and behold, that the PKWARE program 
was indeed a blatant copy of the SEA code.  

When Katz heard this, he called us directly -- bypassing the 
attorneys -- and said he wanted to settle.  

We were only too happy to put a quick end to this.  We wanted the 
facts to come out.  Unfortunately, Katz demanded that part of the 
settlement terms be kept under court seal.  We agreed, and we 
probably should not have, but we did because we wanted to end the 
case quickly so we could get back to updating and improving ARC.  

Some of the terms are public: PKWARE cannot distribute the 
program after January 1, 1989, they cannot substantially change 
the program (though they can make bug fixes) and if they receive 
inquiries for the product, they must send out SEA literature.  
Also, PKWARE is prohibited from creating a new program that is 
compatible with ARC or PKARC.  

If those terms sound one-sided, then it only goes to prove the 
extent to which PKWARE felt that it had no legitimate right to 
its program.  After all, why would he give up everything if he 
was right?  He obviously was not above board in this case, even 
though the settlement terms said he was not admitting fault in 
any way (a standard legalese ploy).  

We are a bit perturbed that one of PKWARE's part-time employees 
obtained a copy of the sealed court document, typed it into a 
file along with numerous typos and loaded it onto several 
bulletin board systems.  She also included her own biased, 
editorial opinion on the case and its terms.  While we don't 
believe PKWARE had authorized this action, it obviously violates 
the sense of fair play that we have lived with, at Mr. Katz' 
request.  

Now we are faced with several problems.  

The bulletin board community has heard many comments by people 
who did not possess the facts of this case, and therefore made 
ill informed opinions. Those opinions seemed like fact because we 
did not respond to them while the case was in progress.  

You are well aware that no party in a legal action can really 
speak his mind while the action is occurring.  Because we didn't 
respond, people assumed that we were wrong.  

Well, we weren't wrong and we won't be silent any more.  We have 
begun responding to the outrageous and outlandish opinions 
expressed against SEA.  We realize that people came to the only 
conclusion possible, given the lack of reliable information about 
this case.  

We will respond to any and every comment about this case.  We 
welcome questions and urge people to call us at our office.  When 
the dust settles, no one will doubt our sincerity in trying to do 
the right thing.  


We'd also like to clear up a few basic misconceptions that have 
appeared on the boards: 

 -  SEA waited too long to take action.  

    Response: The legal world moves slowly.  First we have to be 
    aware of the situation, determine that a violation of our 
    copyright existed, try to settle amicably and then take legal 
    action.  That takes time.  

 -  SEA doesn't upgrade it's program.  

    Response: We have updated the program nine times in three 
    years.  We have made it available for several other operating 
    systems, such as OS/2 and CP/M.  We will continue to upgrade 
    the program to benefit all users on all systems.  

 -  SEA used the courts when it realized it couldn't compete on 
    raw programming talent.  

    Response: We have a very good program and one that is getting 
    better.  We wouldn't be the defenders of an industry standard 
    if we didn't have programming talent to begin with.  

 -  SEA is a Goliath pursuing a David called Phil Katz.  

    Response:  Phil Katz is a not just a person.  He is a 
    company, and a big one at that.  PKWARE is a bigger company 
    than SEA, despite the fact we publish four programs.  We 
    calculate that PKware currently grosses almost $2,000 a day, 
    or about five times what we do.  We challenge him to make his 
    audited figures public.  

 -  PKWARE must be a small company because we hear there are only 
    three employees including his mother.  

    Response: We applaud Mrs. Katz and wish her the best of 
    success.  We too are a family run company.  Andy Foray and 
    Thom Henderson are brothers-in-law and Irene Henderson serves 
    as secretary/treasurer.  We have hired a programmer and a 
    license manager.  We didn't do this because we had a windfall 
    profit, we did this because we needed to stay competitive and 
    to serve new markets.  

 -  SEA should have pursued the case to a jury trial so a 
    precedent could be set for the industry.  

    Response:  We wish we had the money to support our lawyer to 
    take this case to a jury trial conclusion.  However, we were 
    eating hot dogs every night and had to take on outside 
    consulting jobs to make ends meet.  We needed to end this 
    case before the legal fees devoured our company.  Besides, we 
    weren't out to crucify the guy -- we just wanted him to stop 
    stealing our work.  


If there are more questions, be assured, we will respond to them.  

We have also issued a new policy statement regarding the 
licensing of ARC. It has been uploaded to the IBMSW forum on 
CompuServe, the utilities/archivers conference on BIX, and has 
been disseminated to other BBSes as well. The terms probably are 
the most liberal for any licensing policy for any software 
company.  And if that isn't enough, give us a call and we'll see 
what we can work out.  

We welcome the opportunity to better serve the shareware 
community.  We invite your comments and your suggestions.