Abstract: This system protects proprietary software from disclosure and unauthorized use, enforces license limits on number of users of the software, and prevents corruption of protected software by computer viruses. Software protected under this system may execute only on computer systems which incorporate a microprocessor capable of deciphering enciphered instructions in real time. Program files are first enciphered under control of a distribution cipher key. Prior to first use of software, program files must be customized on the user computer system. This customization procedure re-enciphers the programs, so that they are enciphered under a second cipher key. Customized programs may not execute on a computer system other than one constructed with a processor chip which incorporates a crypto microprocessor. The crypto microprocessor is capable of performing this re-encipherment, and of executing both enciphered and unenciphered programs.