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

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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.

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