Bureaucratic Scramble
From TIME magazine, October 2, 1978:

Mathematician William M. Raike of the U.S. Navy's Postgraduate School in Monterey, Calif., and three associates from Seattle invented a gadget they call a "phasorphone." It scrambles voices on both ends of a CB radio or phone conversation and costs about $100, far less than similar devices already on the market.

Officials at the National Security Agency were so impressed that they offered the inventors research contracts. When the foursome declined, the agency asked them to sign on as consultants. They refused again. But then the U.S. Patent Office rejected their application for a patent. Reason: NSA had decided that the sale of phasorphones might endanger national security. The agency was willing to reconsider, however, if the inventors would explain how the scrambler works.

Why does the device threaten U.S. security? The answer, NSA replied in the spirit of catch-22, is classified. The inventors have invested $30,000 in their project and received nothing in return. Complains Raike: "We feel that the Government has illegally seized our property."