Re: The GIF format as intellectual property (fwd)

This is the latest information from Unisys Corporate on the LZW patent.  For 
more information, please see our Home Page: www.unisys.com

LZW Patent
FREQUENTLY ASKED QUESTIONS

Since we released our statement ...... clarifying the terms of our LZW 
patent licensing agreement, we have received several questions from both the 
press and the on-line community at large.  We thought we would share with 
you some of the most frequently asked questions -- and our answers.  We hope 
this may help answer some similar questions you have.


What is the LZW patent?

The LZW patent covers methods and apparatus for lossless compression and 
decompression of digital data.  Unisys holds a U.S. patent (number 
4,558,302) as well as equivalent patents on the technology in Canada, 
France, Germany, U.K. and Italy.  Equivalent patents are also pending in 
Japan.


How did Unisys get the patent?

Data compression and decompression is a critical aspect of data transmission 
and storage and is very much of interest to Unisys and the industry.  The 
patent is the result of research done by Terry Welch at Sperry Corporation 
in the early 1980s that extended previous work by researchers Lempel and 
Zev.  Sperry Corporation was granted the U.S. patent in 1985.  Sperry and 
Burroughs merged in 1986 to form Unisys, thus Unisys became the owner of the 
Sperry patents.


Why is LZW so widely used?

It is a very efficient compression method and a highly advantageous way of 
compressing and decompressing data for a wide variety of purposes.  It is 
easy to implement, operates at high speed and results in high compression 
ratios without loss of data (that is, it significantly shrinks the file 
size).


GIF has been in use since 1987.  Why is Unisys enforcing its rights now?

Unisys only became aware of the use of LZW in the GIF specification two 
years ago.  We immediately began negotiations with CompuServe at that time 
and reached an agreement in June, 1994.  The existence of the patent has 
never been a secret.  In fact, we have completed licensing agreements for 
LZW technology with over 100 companies since 1990, for products including 
hardware, software and on-line information services.  With most of these 
companies, it was the licensees who approached Unisys, not Unisys forcing 
the taking of a license.


Why did it take you so long -- almost five years -- to figure out that GIF 
was infringing on your patent?

As is common in industry, we don t have massive people resources devoted to 
searching and finding products which may be infringing and then undertaking 
the complex task of reverse engineering the products to determine whether or 
not they have infringed on the patent.  In the case of GIF, as soon as we 
became aware we immediately sought to protect the patent through a license 
to CompuServe.


Is this part of a larger campaign to enhance your revenues?

No.  The actual revenue derived from this particular patent is not 
significant.  However, Unisys has invested hundreds of millions of dollars 
in overall technology development and has protected its investments in the 
form of thousands of patents.  We have a responsibility to our shareholders 
to ensure that we protect these valuable company assets.


Why have you targeted the on-line industry now?

Unisys has not specifically targeted the on-line industry, evidenced by the 
fact that we have licensed this technology to hardware, software and 
information services companies over the past several years.   We became 
aware of the applicability of our patent to the GIF specification and we 
simply undertook negotiations with CompuServe as the primary stakeholder in 
this specification.  The announcement content and timing of CompuServe s 
action was solely a CompuServe business decision.


The agreement with CompuServe says I can only use GIF in accessing 
CompuServe?  What about other on-line services?

Our relicensing agreement with CompuServe allows CompuServe to relicense the 
technology only for use in accessing the CompuServe information network. 
 However, commercial, for-profit developers are free to contact us to secure 
a license for LZW.  Non-commercial, non-profit users aren t required to 
secure a license to use the technology.


Is Unisys willing to negotiate with other developers?

Absolutely.  Unisys wants to encourage the use of its patented technology 
and is therefore continuing to make licenses available under the patent at 
reasonable and non-discriminatory terms and conditions to any interested 
party.  Keep in mind that Unisys can only license the patented LZW 
technology.  Unisys has no other stake in GIF (other than using it for our 
own graphics transmission).


What do you consider  reasonable terms ?

While we will conduct negotiations with each applying developer, the 
CompuServe royalty rate is somewhat indicative of the terms that should 
cause no financial barrier to product entry into the on-line marketplace, or 
anywhere else.  The CompuServe agreement calls for the company to pay Unisys 
a royalty of approximately 1% of the selling cost of the product for each 
product sold and connected to the on-line service.  Given the calculation of 
the average price of CompuServe products, this came out to about 11 cents 
per product sold and connected.


GIF is used extensively on the World Wide Web.  What does Unisys intend to 
do there?

Unisys in no way wants to discourage end users and developers from making 
use of this technology.  We intend to license commercial software 
developers.  However, non-commercial, non-profit products, including 
freeware, need not pay license fees.  Organizations introducing a World Wide 
Web server and home page to the Internet are not expected to license the 
technology if they used a third-party software application to develop their 
server offering.  Only the commercial third-party developer in that case 
should secure a license.


What about Internet browsers?

Again, our focus is on the developers and not on the end user.  Also, our 
action is primarily focused on for-profit developers.  If a developer 
intends to make a profit or provide a product for commercial use, they 
should negotiate a license from Unisys.


Will this hurt the use of GIF?

We certainly hope not.  GIF has been outstanding for handling graphics files 
and its use of LZW technology is one of the factors in its success.  Again, 
the licensing terms are very modest and should not be a barrier to its use.


Will users of CompuServe have to pay a royalty to Unisys every time they 
upload or download a GIF file?

No.  Revenue to Unisys under the CompuServe license is independent of the 
number of files transferred.


What will be the impact on end users and commercial software developers?

There should be no impact on individual end users.  We encourage them to 
take full advantage of GIF.  For developers, the impact should be minimal. 
 Again, Unisys continues to make licenses under the patent available to any 
interested party at reasonable and non-discriminatory terms and conditions. 
 License fees for this technology should not be a barrier to any software 
developer.


Why did you announce the changes during the Christmas holiday?

We concluded the license with CompuServe on June 21, 1994.  CompuServe was 
given six months to implement the terms of the license agreement. 
 CompuServe asked for, and we granted, a one-month extension.  The timing 
and content of the announcement, and for that matter, the need for the 
announcement, were entirely of CompuServe's choosing and without Unisys 
knowledge or approval.


I'm using freeware or shareware that can manipulate GIF files.  Can I still 
use it?

Yes.


What about freeware developers?

Our focus is on commercial, for-profit developers.  Freeware is exempted 
from licensing fees.


And shareware developers?

Shareware developers that intend to make a profit from their software should 
negotiate a license with Unisys.  Alternatively, if their software is 
intended to access CompuServe only, they might want to take advantage of 
CompuServe's relicensing agreement with us.


Was the Unisys patent ever challenged?

The Unisys LZW patent was challenged in 1993, re-examined by the United 
States Patent and Trademark Office, and the patentability of all claims was 
reconfirmed in January of 1994.  This is a valid and fully enforceable 
patent.

 ----------
From: www-html
To: Multiple recipients of list
Subject: Re: The GIF format as intellectual property (fwd)
Date: Monday, January 09, 1995 9:26PM

[For those on the cc list, who may not have seen the news, Compuserve and
Unisys have decided to charge royalties for all software that uses GIF.
This being based on Unisys' patent for LZW compression, and (I assume)
Compuserve's copyright on the image format. The licensing agreement is even
worse than the royalty.]

As far as I'm concerned, this is not a battle worth fighting. If Compuserve
(although I suspect the blame lies more with Unisys finally deciding to
pursue software implementations of LZW) wants to force people to pay them
for software using GIF, we should just drop GIF like a hot-potato - it's
not worth keeping.

I'd propose the following.

1) (Moves are already being made in this direction.) Get code out there for
all existing browsers to gain JPEG support ASAP.

2) Draft a spec, similar in concept to GIF, but using an alternative
non-lossy compression mechanism - GNU's gz utility uses one (GNIF?), I'm
not sure if it's available in a form that can be used in commercial
software though. That will handle cases where lossy compression isn't
desired and/or JPEG compression results in a larger file than
straightforward compression. Don't worry about transparency, do allow for
N-bit colormaps instead of just 256.

3) Add a "mask" attribute to <img> which specifies an 8-bit grayscale mask
for handling anti-aliasing (aka "transparency").  Its argument is any
format supported by "src". That will more than make up for the loss of the
transparency option in GIFs. The only disadvantage I can think of for not
providing this in the image format is that you can't provide a mask with an
non-in-line image, but I think the benefits of doing this without creating
a new image format outweigh that minor issue.

None of this is rocket science. If those three things can be pushed forward
with a minimum of fuss, and no time wasted fighting with Compuserve and/or
Unisys, I think the Web could be using JPEG and GNIF as its primary format
within two months.  We'd also show that the internet isn't all flame and no
action - that kind of concerted movement around an obstacle would prove a
substantial warning to anyone else who thinks of playing this kind of legal
game in the future.

=46ighting the Compuserve/Unisys stuff isn't worth it. Mind you, I think the
negative publicity would cause Unisys to give up the fight within a few
months. But in the same time we could not only make their patent worthless,
we could also improve the standards available on the Web. No argument.

Kee Hinckley      Utopia Inc. - Cyberspace Architects=81    617/721-4671
nazgul@utopia.com                               http://www.utopia.com/

I'm not sure which upsets me more: that people are so unwilling to accept
responsibility for their own actions, or that they are so eager to regulate
everyone else's.

Received on Monday, 9 January 1995 17:22:10 UTC