In the late 1980s a fight broke out between System Enhancement Associates (SEA), maker of the ARC program, and PKWARE (Phil Katz Software) over the rights of a program named ARC (or PKARC). It quickly expanded into one of the largest controversies the BBS world ever saw.
Additional Notes:  
The SEA (System Enhancement Associates) vs. PKWARE (Phil Katz Software) legal case changed the landscape of the BBS forever, bringing in laws, trademark/copyright protection, and intellectual property issues to the forefront of the culture. Because of the wide-spread network of Fidonet, the information about the case was spread far and wide, and the memories of the event are long in many minds, even if all the details are fuzzy.

The major players were Thom Henderson of SEA, and Phil Katz of PKWARE. While others were involved (in the case of folks like Andy Foray, quite intimately), the lines were soon drawn as Henderson vs. Katz. Thom Henderson had previously been known for his work with Fidonet, including organizing the IFNA (International Fidonet Association) and being an editor of FidoNews.

The controversy raged around a program called ARC, released around 1985, which would compress and store groups of files as one file, making it easier and quicker to download programs and support files at once off of BBSes. This archiving software was written at SEA, and the source code was freely available. Because of the ease of use and availability of this program, it quickly became the defacto standard for file archives on Intel-based IBM machines.

What happened next was disputed by various parties (and the many versions and debates are covered in the files below), but the upshot was that Phil Katz released PKARC, a faster version of ARC with assembler routines.

In April of 1988, SEA sued Phil Katz and PKWARE for trademark violation, use of the ARC "look and feel", and direct lifting of ARC code. This was one of the first times that a member of the BBS community sued another member, and it was certainly the most publicized and covered of any up to that time (and years beyond).

The debate that raged over this event spread to many parts of Fidonet and on all sorts of online services, such as Compuserve. Calls were made for protests, petitions, renaming of .ARC files to .SUE, and blatant violation of SEA's claims to ownership with the intention of bankrupting the company in legal fees.

Ironically, Henderson's own work in architecting and improving Fidonet were used against him as the network spread more debates, contentions, and rumor regarding the legal case than he could reasonably expect to respond to.

During this time, Phil Katz created a new compression program, which was named for him by his friend Bob Mahoney (sysop of EXEC-PC BBS), who suggested "ZIP", because (according to a phone conversation between Jason Scott and Mr. Mahoney), it implied speed ("zippy") and sexiness ("zipper"). The name stuck, and PKZIP became the standard for compression on PCs and other platforms.

Ultimately, SEA was sold to a Japanese Company in 1992 and Henderson moved back to Virginia. The .ARC format fell out of favor and succumbed to .ZIP, which persists to the present day.

Tragically, Phil Katz was found dead in a hotel room in April of 2000, having died from alcohol-related poisoning.

A very large thank-you goes to Bruce Wilson for tracking down and sending a couple dozen files (available below and elsewhere) related to the case.

sea-pk.cis (179K) SEA vs. PKARC Message Thread on Compuserve's IBMSW SIG Forum (September 18, 1988)
release.txt (2.5K) Press Release from System Enhancement Associates (SEA) regarding Settlement in SEA vs. PKWARE Case (August 2, 1988)
confirm.msg (513) Confirmation of Accuracy of SEA Transcripts from James Moran to Bruce Wilson (September 7, 1988)
katzbio.txt (21K) The short, tormented life of computer genius Phil Katz, by Lee Hawkins Jr. of the Journal Sentinel (May 20, 2000)
lontimes.txt (5.7K) Obituary for Phil Katz from the London Time (May 11, 2000)
sea.txt (13K) SEA vs. PKWARE: Shareware Company Threatens BBS World that Gave it Life (Petition) (September 5, 1988)
linhart.sea (4.9K) Steve Linhart offers his summary and opinions on SEA v. PKWARE
contempt.spk (6.9K) System Enhancement Associates, Inc. is found in Contempt (October 31, 1988)
blw-tem.920 (19K) Criticism of Bruce Wilson's creation of a Form Letter for Complaints regarding SEA vs. PKWARE, by Tom Marshall (September 14, 1988)
l-jones.msg (2.2K) Protest letter to Thom Henderson from Loren D. Jones of RBBS-PC of Chicago (September 8, 1988)
trademrk.msg (11K) Keith Petersen claims common usage of the ARC term exists before SEA (August 4, 1988)
excerpt.cis (64K) An Excerpt of Relevant Messages from the SEA vs. Phil Katz Message Thread on Compuserve (September 18, 1988)
agrement.txt (9.2K) Disclosure of SEA vs. PKWARE Agreement, typed by Karen Little (September 1, 1988)
magpie4 (52K) Dean W. Cooper Presents a collection of messages on SEA vs. PKWARE on the Magpie BBS in NYX (November 18, 1988)
archives.txt (145K) Message thread regarding Archivers from the Magpie BBS (Captured June 30th, 1987)
baker.html (6.6K) Ben Baker Remembers Phil Katz (May 5, 2000)
fidotech.log (8.7K) Incomplete Log of some Fidonet Debates on SEA v. PKWARE (September, 1988)
thom.txt (786) Description of Released Products and Conclusion of SEA
letter.txt (1.4K) Proposed Form Letter to Thom Henderson regarding SEA vs. PKWARE lawsuit
original.ltr (6.9K) Letters regarding SEA v. PKWARE, including SEA's Attorney and Karen Little (December 23, 1987)
pkatz94.jpg (21K) Promotional photograph of Phil Katz in 1994
judgment.txt (7.0K) Transcription of SEA v. PKWARE udgement (In Favor of SEA) on August 1st, 1988
philkatz.html (3.1K) Thom Henderson's Obituary of Phil Katz' Death (May 5, 2000)
pcworld.txt (8.3K) SEA vs. PKWARE Article from PC World Magazine (1988)
msg1.txt (378) Call for Protest Letters to SEA (September 8, 1988)
fido540.txt (36K) FidoNew Volume 5, Number 40, Heavily Discussing SEA vs. PKWARE (October 3, 1988)
lawmug.921 (1.4K) Brian Wilson Criticizes trademarking of .ARC by SEA
contempt.txt (12K) SEA Calls PKware in Contempt of Cross-License Agreement of July 29, 1988 (August 11, 1988)
retract.txt (889) Retraction by Andy Foray regarding Phil Katz' statements under Oath (September 18, 1988)
statment.sea (9.9K) Now That It's Over, What Did It Mean? by Thom Henderson (October 3, 1988 Fidonews)
pksuit.txt (4.1K) Keith Peterson angrily reprints PC Week Article on SEA vs. PKWARE Lawsuit (June 14, 1988)
warrant.txt (2.5K) Outstanding Warrants for Phil Katz (2000)
pkzip.htm (30K) The Rise and Fall of a Software Star; Phil Katz Loved Code - and Liquor By MATT MURRAY and JEFFREY A. TANNENBAUM
letter2.txt (1.9K) Proposed Letter to flood SEA with Litigation to protect its Trademark
protest (4.1K) Programmer protests the SEA vs. PKWARE controversy by renaming all .ARC files to .SUE (September 4, 1988)
sea-pk.chi (16K) Message Regarding SEA's Side of the SEA vs. PKWARE Lawsuit (September, 1988)
pksea8.txt (168K) Discussion on Compuserve Regarding SEA v. PKWARE, including weigh-ins by Andy Foray of SEA (September, 1988)
policy.sea (4.3K) System Enhancement Associates Policy Statement on ARC Trademark and Copyrights
pkware.923 (13K) Messages from the PKWARE BBS (And Phil Katz) on the SEA vs. PKWARE Lawsuit (September, 1988)
pcbsyspk.log (24K) Fidonet Discussion of SEA vs. PKWARE lawsuit, with weigh-ins from various figures in the case (September, 1988)
pkcis4.txt (12K) Debate on Compuserve regarding SEA License to use ARC (August, 1988)
sea-comp.txt (20K) Verified Complaint of SEA to Phil Katz and PKWARE, Inc. (April 2, 1988)
philkatz.txt (8.8K) Phil Katz answers a number of questions regarding PKARC (July 22, 1987)
msg3.txt (1.8K) Bruce Wilson challenges SEA to sue him for Trademark Infringement (September 9, 1988)
pkvsarc.txt (28K) Debate on BBS Regarding SEA vs. PKARC Lawsuit and Issues (September, 1988)
msg2.txt (1.9K) Peter G. Olivola announces he is removing SEA Software from his BBS (September 9, 1988)
arc-hist.txt (6.5K) A Short History of Compression and Archive Files on Microcomputers, by Paul Homchick (October 1, 1988)
burgview.txt (1.6K) Sysop Vern Buerg weighs in, asking for an end to the conflict
reply.txt (31K) Reply by Dean W. Cooper to story in FidoNews from Thom Henderson (October 11, 1988)
pcweek.txt (2.8K) Shareware Developers Fight Court Battle Over Copyright Infringement, by Daniel J. Lyons PCWEEK (May 31, 1988) Excellent Article on Phil Katz