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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.

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