The Clipper chip is a chipset that was developed and promoted by the U.S. Government as an encryption device to be adopted by telecommunications companies for voice transmission. It was announced in 1993 and by 1996 was entirely defunct.
The heart of the concept was key escrow. In the factory, any new telephone or other device with a Clipper chip would be given a “cryptographic key”, that would then be provided to the government in “escrow”. If government agencies “established their authority” to listen to a communication, then the password would be given to those government agencies, who could then decrypt all data transmitted by that particular telephone.
The CISSP Prep Guide states, “The idea is to divide the key into two parts, and to escrow two portions of the key with two separate ‘trusted’ organizations. Then, law enforcement officals, after obtaining a court order, can retreive the two pieces of the key from the organizations and decrypt the message.”
References: http://en.wikipedia.org/wiki/Clipper_Chip and Source: KRUTZ, Ronald L. & VINES, Russel D., The CISSP Prep Guide: Mastering the Ten Domains of Computer Security, John Wiley & Sons, 2001, page 166.