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."