FREQUENTLY ASKED QUESTIONS
Since we released our statement this morning 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
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
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
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
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
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
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
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
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
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