Shortly after its release, PGP encryption found its way outside the United States, and in February 1993 Zimmermann became the formal target of a criminal investigation by the US Government for "munitions export without a license". At the time, cryptosystems using keys larger than 40 bits were considered munitions within the definition of the US export regulations; PGP has never used keys smaller than 128 bits, so it qualified at that time. Penalties for violation, if found guilty, were substantial. After several years, the investigation of Zimmermann was closed without filing criminal charges against him or anyone else.
After the Federal criminal investigation ended in 1996, Zimmermann and his team started a company to produce new versions of PGP encryption. They merged with Viacrypt (to whom Zimmermann had sold commercial rights and who had licensed RSA directly from RSADSI), which then changed its name to PGP Incorporated. The newly combined Viacrypt/PGP team started work on new versions of PGP encryption based on the PGP 3 system. Unlike PGP 2, which was an exclusively command line program, PGP 3 was designed from the start as a software library allowing users to work from a command line or inside a GUI environment. The original agreement between Viacrypt and the Zimmermann team had been that Viacrypt would have even-numbered versions and Zimmermann odd-numbered versions. Viacrypt, thus, created a new version (based on PGP 2) that they called PGP 4. To remove confusion about how it could be that PGP 3 was the successor to PGP 4, PGP 3 was renamed and released as PGP 5 in May 1997.
The PGP Desktop 9.x family includes PGP Desktop Email, PGP Whole Disk Encryption, and PGP NetShare. Additionally, a number of Desktop bundles are also available. Depending on the application, the products feature desktop e-mail, digital signatures, IM security, whole disk encryption, file, and folder security, encrypted self-extracting archives, and secure shredding of deleted files. Capabilities are licensed in different ways depending on the features required.
Within PGP Inc., there was still concern surrounding patent issues. RSADSI was challenging the continuation of the Viacrypt RSA license to the newly merged firm. The company adopted an informal internal standard that they called "Unencumbered PGP" which would "use no algorithm with licensing difficulties". Because of PGP encryption's importance worldwide, many wanted to write their own software that would interoperate with PGP 5. Zimmermann became convinced that an open standard for PGP encryption was critical for them and for the cryptographic community as a whole. In July 1997, PGP Inc. proposed to the IETF that there be a standard called OpenPGP. They gave the IETF permission to use the name OpenPGP to describe this new standard as well as any program that supported the standard. The IETF accepted the proposal and started the OpenPGP Working Group.
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