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gif format in newsbytes

CompuServe GIF License & Royalties Raises Hackles
COLUMBUS, OHIO, U.S.A., 1995 JAN 4 (NB) -- On-line giant CompuServe has
sparked controversy on the Internet by offering a $1-plus-royalties license
for developers to use its previously free GIF (Graphics Interchange Format)
image file format. CompuServe terms the fee an offer and a benefit to the on-
line community, but skeptics quickly dubbed it a "GIF tax."

The new fee system is based on a licensing agreement reached between
CompuServe and Unisys Corp. (NYSE:UIS) in June, 1994, for use of LZW (Lempel-
Zev-Welch) compression in its GIF format. Unisys has claimed a patent on LZW

Under the CompuServe agreement, developers who wish to operate under the on-
line firm's LZW license agreement with Unisys pay a one-time fee of $1 plus a
royalty of 1.5 percent or 15 cents per registered program, whichever is
greater. Downloaded programs that do not get registered are not subject to
the fee, nor are end-users.

CompuServe announced the new fee system in various areas or "forums" of the
service on December 29. The timing has led to suspicions by some that the
service was not being fully honest with its members.

In an open letter, Pat Clawson, president and chief executive officer (CEO)
of TeleGrafix Communications Inc., called it "the online communications
community's equivalent of the sneak attack at Pearl Harbor," and added: "The
announcement of the CompuServe-Unisys GIF Tax on December 29, during the lull
between Christmas and New Year's Day, was clearly timed to cause maximum
damage while an unsuspecting public celebrated the holidays."

Clawson said his firm, which developed the RIPscrip 2.0 online multimedia
technology and the RIPTERM terminal program that leans heavily on the JPEG
(Joint Photographic Experts Group) image format, will drop support of GIF
images because of the new fee system. RIPscrip 2.0 is scheduled for release
January 16.

Speaking to Newsbytes, CompuServe spokesman Pierce Reid acknowledged that the
release date may have been unfortunate from a public relations viewpoint, but
he said it was an accident of timing, not a desire to avoid public scrutiny.

Reid pointed out that it took a year and a half to hammer out a licensing
agreement with Unisys Corp. (NYSE:UIS). Unisys holds a patent on the GIF
format's underlying LZW compression technology. Once the agreement with
Unisys was signed in June, 1994, he added, it took CompuServe another six
months to arrive at a way to, as he put it, "share" the license.

"Six months is not a long time to settle the details of a licensing
agreement, if you know how these things work," he told Newsbytes. "We're not
making any money on this. We paid a substantial fee to Unisys for the
license, and we offered to share the license for the benefit of the
development community as well as for ourselves and our subscribers."

Reid said the license was based on the fact that CompuServe had found merit
in a Unisys patent claim. CompuServe had used the patented LZW technology in
its 1987 development of the GIF format, believing the technology to be in the
public domain. Unisys contacted the on-line firm about its patent claim in
1993, and that eventually led to the December 29 announcement, the firm said.

Commented Reid: "I've been watching the Internet, and those who are
commenting are on a bell curve -- the vast majority are taking a reasonable
view, but there are always those out on the extreme ends.

"A number of people regard this as a real benefit. CompuServe, by requiring
no money for negotiations, is saving developers from the need to waste time.
There's no worrying about legal or licensing issues, and we've done that for
a dollar."

(Craig Menefee/19950104/Press Contact: Pierce Reid, CompuServe, 614-538-4571;
Pat Clawson, TeleGrafix, 714-379-2140, Internet e-mail
[email protected]; Oliver Picher, Unisys, 215-986-5367)

Unisys Seeks Royalties On GIF Algorithm
BLUE BELL, PENNSYLVANIA, U.S.A., 1995 JAN 4 (NB) -- Unisys Corp. (NYSE:UIS)
said it will seek royalty payments from developers of software using the
Graphic Interchange Format (GIF). Unisys said it owns rights to an algorithm
that is widely used in GIF tools.

Oliver Picher, a spokesman for Unisys, told Newsbytes that the online service
CompuServe introduced the GIF format in 1987, and incorporated the Unisys
algorithm, apparently believing it was in the public domain. Unisys learned
that the algorithm was used in the GIF technology about two years ago,
contacted CompuServe, and in June, 1994, the companies reached an agreement
under which CompuServe paid Unisys an undisclosed sum for use of the

The payment was "a reasonable amount but not an overwhelming amount," Picher
said, declining to reveal the exact sum.

CompuServe was the first to license the algorithm from Unisys for use in a
GIF tool, Picher said, but about 100 companies have licensed it for other
purposes. Picher said one other online information service has already
licensed the algorithm, but could not say if it was for GIF-related use in
that case.

Unisys is negotiating with all the major online services for possible license
agreements, Picher said. While he would not give specifics, he said the terms
Unisys is seeking are "very reasonable to the point where license fees
shouldn't be a barrier" to using GIF. He added that people who have GIF
software on their PCs will not be affected.

The same algorithm is also used in the Tagged Image File Format (TIFF)
graphics format, and Unisys concluded a license agreement with Aldus Corp.
some time ago, Picher said.

(Grant Buckler/19950104/Press Contact: Oliver Picher, Unisys, 215-986-5367)

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