Sun's deal includes one deliciously ironic twist: The US code-export policy is a national-security legacy of the Cold War, and the software that Sun plans to market was developed by a suburban Moscow software firm in which the California company has invested, Elvis+ Co.

Humphrey Polanen, general manager of Sun's Network Security Products Group, said Monday that the company was responding to "customers crying out for strong encryption" to help facilitate electronic commerce. He emphasized that Sun had no role in developing the Russian-developed software, called PC Sunscreen SKIP E+, but is merely using its worldwide network to get it to market.

Polanen said the program will have wide applications for electronic commerce and would represent a key step in establishing "trust and confidence in the Internet as a place to do business."

Currently, the Commerce Department limits exports to 40-bit products, though narrowly written exceptions have been made for 56-bit and 128-bit programs that include special provisions for key escrow. The product Sun will market includes a variety of strong algorithms, including 128-bit ciphers. No key recovery is built into the product.

Polanen said that since the company's arrangement with Elvis+ does not entail exporting a US-made product, and because Sun offered no technical assistance to the Russian firm, the export rules are not an issue in the case. Eugene Cottilli, a spokesman for the Commerce Department's export administration bureau, said Monday that the agency had no comment on Sun's action.

Sunscreen is based on Sun's own Simple Key Management for IP (SKIP) technology, one of several published digital encryption protocols. Sunscreen sits on users' workstation desktops and allows encrypted, authenticated connections to any other SKIP-enabled device. The program allows transparent use of Windows applications by parties at both ends of the connection.

Analysts have suggested that by marketing the software, Sun is mounting a key challenge to the current policy. Unless the Commerce Department forces Sun to back down, they say, the door will be open to similarly aggressive efforts by other makers of encryption products.

The issue is at the heart of two bills making their way through Congress - one in the House, one in the Senate - that would demolish the current restraints on encryption export.

Jim Bidzos, chief executive officer of RSA Data Security, said by email that more than anything, Sun's deal "demonstrates, quite clearly, that US companies will jump through hoops to sell crypto." He predicted that other companies will follow Sun's lead.

But Jonah Seiger, communications director for the Center for Democracy and Technology, said it was too early to tell whether Sun is really striking an effective blow against the policy. He drew a narrower conclusion.

"It's good business," Seiger said of Sun. "They're trying to find ways to satisfy the market. This does show, yet again, why export controls don't make any sense."

Said Bidzos: "Think about it - the net result is that crypto gets out, but Russia gets jobs. Sun gets a minority stake. There's no reason Sun shouldn't have had it all, except export controls."



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