A Kinder Unisys Makes Web Users Burn

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Event Summary

Unisys Corp holds the patent for a data compression algorithm known as LZW. Many years ago CompuServe used LZW as the basis of its GIF image format. In 1995 it obtained a license fee arrangement from CompuServe. It has also obtained licensing arrangements with most major commercial vendors of graphics programs. Unisys is now asking Web developers to determine whether the software they are using is properly licensed; if not, Unisys is requesting a $5,000 fee from sites displaying GIF files. Web developers are organizing an event at Unisys' Bluebell, PA, headquarters at which artists and users will burn GIF images in protest.

Market Impact

Whatever license fees Unisys may get from this patent are probably noise to its overall revenues ($7.2 billion in 1998), and the company is not a competitor with others from which it is seeking licensing fees. The potential impact of this action is on companies using the GIF format. GIF is the most popular image format for the Internet, especially for original artwork, although the JPEG format is frequently used for photographic images. With millions of GIF images all over the Internet it is not hard to believe that a strong legal challenge by Unisys will have wide-ranging effects. However, although many web developers and other users have formed the opinion that Unisys is out to wring pennies from every single GIF image, that does not seem to be the case. The recent announcement is less a new policy than a new tactic. Unisys had already been attempting to get for-profit websites to certify that their GIF images were created by licensed software. The recent announcement is in fact a reduction in the license costs, according to the company. It may, of course, also be a shot across the bow of large websites and portals which they suspect are using GIF images created by software that did not license the LZW patent. But Unisys claims that while they are seeking, in their stockholders' interest, to obtain fees from for-profit users of the compression algorithm, they are not attempting to gain control of the GIF format. The company claims to have offered free licences to non-profit users and websites, and is only interested in license arrangements with large, profit-making sites. "We're not after people doing Beanie Baby sites," said Unisys spokesperson Oliver Pitcher. Pitcher suggested that Unisys' attempts to collect fees will not slow down the use of the Web or the use of the GIF format.

It is worth noting that there is a new graphics standard called PNG (and a closely related companion called MNG that handles animation and other multimedia effects) that can be used freely. Conversion of existing GIF format files to PNG is not difficult, and at least the high-end design tools such as those from Corel and Adobe can generate PNG as easily as they can generate GIF. The only reason for not converting all images to PNG immediately is that only the latest generations of browsers support it well.

User Recommendations

Those affected by the Unisys patent are manufacturers of software that creates GIF files, sites that post such files, and companies that may give away, in support of equipment such as digital cameras of scanners, "free" software that uses the LZW algorithm. Unisys has agreement with most of the first group. Comments made by a company patent lawyer at SlashDot suggest that the real thrust of this announcement is to get compliance from the third group, those who issue "free" software with their equipment. Of the websites, those most likely to be at risk would be large enough to attract Unisys' notice and cheap enough to use inexpensive graphics software. Also possibly at risk, depending on unrevealed aspects of Unisys' strategy, would be sites that post user-generated GIF images; among such sites could be ISP users' sites and special interest sites. A large site that earns revenue will probably be happy to pay the $5,000 fee just to make the letters from Unisys' patent attorneys go away. Others will probably not be contacted, although they are certainly free to offer to pay the license fee if they believe that to be appropriate.

The real winner will be the PNG format. Just as most websites now take forms, tables and JavaScript-enabled browsers for granted, it won't be more than 18 months before PNG images appear regularly on websites, and not too long after that GIF will be history, except on pages that are not maintained. Since PNG is generally believed to be superior in many ways to GIF, this will be a good development for all. Whether the enmity of web developers, and the piles of ashes outside their headquarters, will have much affect on Unisys remains to be seen, but the facts do not seem to support their wrath.

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