Subject: CompuServe and UniSys to restrict use of gif format
From: [email-masked] (Bill McEachern)
Date: Wed, 4 Jan 1995 14:51:56 GMT
Newsgroups: ncf.general,ncf.admin,ont.general,ott.general,uw.general

The following is reposted from the RISKS DIGEST 16.69 (newsgroup comp.risks).
If true, this spells the end of the gif standard.  I guess we'll all have
to switch to jpeg.  I have posted it here because it is of general interest
to all computer users.  Damn those software patents!

~Date: Tue, 3 Jan 95 13:27:49 PST
~From: "Peter G. Neumann" <[email-masked]>
~Subject: One for the GIFfer (CompuServe-Unisys GIF Tax Protest, Pat Clawson)
 
An Open Letter to Our Colleagues In the Online Communications Community:
 
The announcement by CompuServe and Unisys that users of the GIF image format
must register by January 10 [1995] and pay a royalty or face lawsuits for
their past usage, is the online communications community's equivalent of the
sneak attack at Pearl Harbor.
 
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.
 
We at TeleGrafix Communications have no quarrel with those who seek to
protect their intellectual property and profit from it.  Indeed, we are in
business to do the same.  We believe those who develop software are entitled
to reap financial rewards from their labors.
 
But in our opinion, the timing and circumstances of the CompuServe-Unisys
action indicates this is a shakedown of the online communications community
by two powerful corporations, rather than a reasonable effort to protect
intellectual property.
 
The GIF format has been in widespread public use since 1987.  Its widespread
use and royalty-free licensing has been encouraged by CompuServe for years.
Neither CompuServe or Unisys have made any significant improvements to GIF
or its underlying LZW algorithm and compression process to justify charging
for what has been free.

Giving GIF users only 14 days to comply with sudden, unexpected demands to
pay the private CompuServe-Unisys GIF Tax or face prosecution for past usage
of what had been promoted for seven years as free, open standard software is
unconscionable. It is especially outrageous since CompuServe and Unisys
admit in writing that they decided to require licensing SIX MONTHS AGO in
June, and didn't announce it to the public until now.
 
According to the CompuServe-Unisys GIF licensing agreement, the settlement
of the patent dispute was executed on June 21, 1994.  CompuServe agreed to
implement the agreement "as soon as reasonably practicable and in no case
later than six (6) months after the date this Agreement is executed..."
That six month period ended on December 21, 1994 -- but CompuServe did not
make the licensing terms public until December 28.  Indeed, CompuServe
appears to have violated the terms of its own settlement agreement with
Unisys.
 
While many of the messages we have read online in reaction to the
CompuServe-Unisys GIF Tax decree express both dismay and disbelief,
virtually none have analyzed the actual provisions of the licensing
agreement.  It is in this area that TeleGrafix Communications wishes to
contribute to the dialogue.
 
In our opinion, the CompuServe-Unisys licensing agreement is both illogical
and overly broad.  Let's examine some of its key provisions. All quotes
cited are directly from the agreement.
 
1. CompuServe will license Developers who want to use GIF technology.  The
term "developer" is defined as "the other undersigned party to the
agreement," and it seems to apply to ANYONE who contemplates distributing
any product that uses the GIF format.
 
2.  Developers will be licensed to sell or distribute "Products" that "use
and exploit GIF...solely within the Field of Use."  The term "Field of Use"
is defined as "primarily for accessing the CompuServe Information Service
and for manipulating and viewing data received through the CompuServe
Information Service."  The licensing agreement further defines the term
"Products" as being "software that is developed or distributed...which is
designed for and used primarily for accessing the CompuServe Information
Service and for manipulating and viewing data received through the
CompuServe Information Service."  IT APPEARS THAT THE ONLY LAWFUL USE OF GIF
WILL BE FOR COMPUSERVE-RELATED PRODUCTS.  Using GIF images in any other
manner, such as on CD-ROMs or bulletin board systems, is prohibited.  Most
of the thousands of products that have used GIF in some manner are
henceforth contraband.

3. Developers may no longer "use, copy, modify or distribute the GIF
specification, except as expressly permitted by CompuServe."  This states
that the GIF specification can no longer be shared, published or uploaded in
any manner without the express consent of CompuServe.
 
4. Members of the public are prohibited from using any software product
containing GIF until they have become a REGISTERED user of the product.  The
customer also must agree to use the product "primarily for accessing the
CompuServe Information Service and for manipulating and viewing data
received through the CompuServe Information Service."  This virtually
eliminates the concept of freeware or shareware containing GIF capabilities,
since prospective customers can no longer try out these software products
without registering them first.
 
5. Software developers must pay $1.00 for a license to use GIF, PLUS a fee
equal to the GREATER of 1.5% of the selling price of the product, or $0.15
per "Disposition."  Disposition is defined as "the sale, lease or license or
any other grant of rights to a Product or any new Product."  All royalties
must be paid quarterly.  Noncommercial and freeware usage of GIF technology
is NOT exempted from the royalty requirement.  Because the royalty
provisions and definition of "Disposition" are so broad in scope, it appears
that a GIF Tax payment may be due to CompuServe-Unisys each time a GIF image
is transmitted via BBS or Internet.  The operators of a BBS or World Wide
Web site with hundreds or thousands of GIF images online could easily be
bankrupted by these licensing requirements.
 
6. CompuServe must be notified of ANY new product using GIF when it is first
offered to customers.

7. Persons using GIF must keep records of its use, and CompuServe has the
right to audit those records every year upon seven days notice.  Persons
using GIF must pay the cost of the audit if a royalty underpayment of 10%
or more is discovered, along with 12% interest on any underpaid royalties.
 
8. Even if the patent is later found by the courts or the U.S. Patent Office
to be invalid and unenforceable, or if the patent expires, any developer must
"return all copies of the GIF specification and any confidential information
of CompuServe then in its possession or control to CompuServe, (ii) stop
using the Licensed Technology, and (iii) stop distributing Products."  This
states that EVEN IF THE PATENT IS OVERTURNED OR EXPIRES, YOU MUST STOP USING
OR DISTRIBUTING GIF.
 
9. Even though CompuServe has publicly disseminated the text of the
agreement it wants GIF users to sign, the terms of the agreement are to
remain confidential.  This is illogical, to say the least, since they have
posted it for public download on their own system.
 
10. Developers have to indemnify and hold CompuServe harmless for any
damages if their CUSTOMERS somehow use GIF technology in a way not permitted
by the licensing agreement.
 
11. Unisys has the right to enforce the agreement, as well as CompuServe.
Further, Unisys has the right to pursue legal action or seek damages against
Developers even after the agreement has terminated.
 
TeleGrafix Communications Inc. will not sign such a licensing agreement.  We
think most other software developers, BBS sysops and Web site operators also
will refuse to sign.
 
We encourage our colleagues in the online communications community to
evaluate the CompuServe-Unisys action, and to lodge appropriate protests
directly with those companies.
 
We believe that the CompuServe-Unisys GIF Tax drives a stake through the
heart of Internet development.  It will cripple the World Wide Web, NCSA
Mosaic, and other Internet multimedia technologies that rely heavily on GIF
imaging.
 
Fortunately, we at TeleGrafix Communications do not depend on GIF imaging in
our new RIPscrip 2.0 online multimedia technologies.  We chose to implement
the JPEG image format and only recently decided to add GIF support as a
convenience to our customers.  Due to the restrictive conditions of the
CompuServe-Unisys GIF Tax and licensing agreement, we must now reevaluate
our plans for supporting GIF use in the upcoming release of RIPscrip 2.0.
 
While our company hopes to profit financially from our advanced RIPscrip 2.0
technology, we will not demand royalties from those who have used the
freeware versions of our earlier RIPscrip 1.54 products and/or technical
specifications.  The RIPscrip 2.0 specification also will be made public for
third-party use after it is finalized.
 
We expect that the CompuServe-Unisys action will spell the death of GIF
as a commercially viable technology, shifting the attention of the online
communications community to JPEG imaging.
 
Sincerely,
 
Pat Clawson
President & Chief Executive Officer
TeleGrafix Communications Inc.
Huntington Beach, CA
 
Voice: (714) 379-2140
Fax: (714) 379-2132
BBS: (714) 379-2133
Internet: [email-masked]
 
--
Bill McEachern                "I trust you all remembered to bring in your
#include <std_disclaimer.h>    implements of destruction" - Principal Skinner
Internet: [email-masked] [email-masked]

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From: [email-masked] (Peter Bumbulis)
Subject: Re: CompuServe and UniSys to restrict use of gif format
Message-ID: <[email-masked]>
Sender: [email-masked] (news spool owner)
Nntp-Posting-Host: csgrs6k1.uwaterloo.ca
Organization: University of Waterloo
References: <[email-masked]>
Date: Wed, 4 Jan 1995 16:21:15 GMT
Lines: 136

The following was posted to comp.infosystems.www.providers; it might shed
some more light on the issue.

Peter
-------------------------------------------------------------------------------
~Subject: Re: Use a GIF, Go to Jail 
~Date: Wed, 04 Jan 1995 00:20:11 -0500
~From: James Waldrop <[email-masked]>

> First of all, having a GIF is not an infringement of the Unisys patent.
> However, if you operate a viewer or produce a GIF-format image, you have
> opened yourself up to suit.  CompuServe has absolutely nothing to do
> with this, as the attached text shows.
> 
> The end result of all of this is that GIF is dead.  Long live JPEG.
> 
> James aka Sulam
> 
> A VP of CompuServe sez:
> #177 of 178: Tim Oren (oren)      Tue Jan  3 '95 (18:11)    35 lines
>  
>  Some of the folks here know me as a long time well-being or from other
>  places (Hi, Laura!).  I have the distinction (?) of being a vice-president
>  at CompuServe as well.  Mandel has reposted a informal note of mine on
>  the Web 68 / EFF 658 thread regarding the LZW controversy.  I also wanted
>  to make a few more comments on this Web only topic:
>  
>  CompuServe has not and is not asserting a proprietary interest in the GIF
>  spec.  Even if we wanted to, there are enough sharp attorneys here who could
>  remind us that it has long been publicly disclosed with no patent filing
>  or attempt to assert other rights.  However, in developng GIF, we did
>  use the LZW compression scheme.  Unknown to us at the time, Unisys had
>  filed for a patent on that algorithm, even though we found it in a public
>  source.  We were approached regarding the matter long after GIF had been
>  widely released on CompuServe and to the market at large.  Regardless of
>  what you may think about software patents in general, or the tactic of
>  waiting until substantial infringment has occured, we were in an infringing
>  position and had no option to seek a license.  Since we have a substantial
>  base of developers who were not only creating clients to Compuserve,
>  but had used GIF in good faith in their own products, we also needed to
>  in some way protect their interests by developng a pass through license.
>  
>  The text of that license, or portions of it, are what's circulating
>  around the nets.  Because it has been taken out of context, many are taking
>  it as an assertion, by CompuServe, of an intent to prosecute proprietary
>  rights in GIF against all users, including developers of Web clients
>  and other software.  This is not the case.  CompuServe has no intent
>  of pursuing rights in GIF in such a fashion, and I am writing this with
>  the knowledge and consent of our CEO.  Unisys, of course, may follow
>  whatever they see as their best interests in the matter.  For better or
>  worse, as a patent attorney can tell you, selective enforcement is allowed
>  by the letter of the law.
>  
>  Tim Oren
>  Vice President
>  CompuServe
> 
> and more from Mr Oren:
> 
>  Re GIF, I can talk about it, and if the impression being left is that
>  we are trying to make big bucks, I definitely need to talk about it,
>  because we've left the wrong impression.  Here's the story, which you
>  CAN repeat, WITH my name attached:
> 
>  GIF was originally developed at CompuServe by Steve Wilhite, who
>  currently works for me.  As part of it, he used with the LZW
>  compression scheme, which had been openly published by Unisys engineer
>  in a journal.  A number of other developers picked up and used LZW as
>  well.  None of us knew that Unisys had filed for, and eventually
>  received, a patent on the LZW scheme.  I believe this is called a
>  'submarine' patent - it can surface and get you later.  We were got.
> 
>  Unisys proposed an infringement suit, and we had no recourse but to
>  settle.  We are paying licensing fees in a manner which IS a
>  nondisclosure item.  One of the things we needed to be able to do is to
>  'pass through' a license embodying both LZW & GIF to those developers
>  who create their own client programs to CompuServe, such as TAPCIS and
>  Mac Nav, since they 'practice' LZW as well.  The reason that GIF is
>  included as a conditional in such licenses is that we can't pass
>  through an unrestricted LZW license, and the reason there is money
>  involved is that we in turn have to pay Unisys.
> 
>  If anyone is taking the impression that we are asserting proprietary
>  rights in GIF additional to the LZW patent, that is wrong.  Neither are
>  we attempting to assist Unisys in enforcing their patent with respect
>  to non-CompuServe environments, such as the Internet, though 'buying
>  into' our license would be one way of Internet based vendors in
>  avoiding possible action from Unisys.
> 
>  This is far more headache than it is worth, believe me, and we are
>  actively engaged in looking at migration strategies that will get us
>  and our customers off the hook.  Our reputation has been damaged by
>  being an unwitting partner to Unisys during those 7 years of
>  encouraging proliferation, and we are not happy about it.  (I'm sure
>  Stallman - rms - could find a moral in here somewhere... )
> 
> And still more:
>  COMPUSERVE ANNOUNCES GIF DEVELOPER LICENSE PROGRAM
>  
>  On May 28th, 1987, CompuServe introduced the Graphics Interchange Format
>  (GIF) specification, subsequently revising the specification on August 8,
>  1990.  Since that time, CompuServe has worked extensively with developers
>  to license GIF and make it the worldwide graphics standard that it
>  currently is. GIF uses LZW compression and decompression methods that
>  CompuServe originally thought to be public domain. However, Unisys
>  Corporation claims patent rights to the LZW algorithm and compression
>  process. This has caused some confusion as to whether developers need to
>  license LZW from Unisys.
>  
>  CompuServe recently negotiated and secured a patent license for LZW
>  technology from Unisys. Through this license, CompuServe is able to provide
>  a sub-license to GIF developers. This CompuServe GIF license agreement
>  grants the developer lawful use of GIF and the LZW algorithm for certain
>  uses. This relieves licensees from the obligation to license LZW directly
>  from Unisys and extends to them other benefits of the terms negotiated by
>  CompuServe. The CompuServe GIF license is based upon terms established with
>  Unisys by CompuServe. This includes a requirement that the developer's
>  software be used primarily with the CompuServe Information Service or use
>  information obtained through the CompuServe Information Service. This
>  license is subject to a reasonable royalty.
>  
>  GIF developers who register prior to January 10, 1995 can obtain the
>  benefit of a clause in the CompuServe-Unisys agreement that states that
>  Unisys will not pursue royalty claims for past use of LZW. The CompuServe
>  GIF developer agreement, including compliance requirements, is available on
>  the CompuServe Information Service in the Standards and Spec's section of
>  the Graphics Support Forum. A new specification will be finalized which
>  will become a part of the license agreement.
> 
> ---------------------------------------------------------------------------
> Gnarly Spewage from James Waldrop <[email-masked]>
> ....check out the VAL home-page @ http://www.io.com/user/jbay
> Mister Gotti would very much like you to invite someone to join VAL. Today.
-- 
Peter Bumbulis                                          [email-masked]
Computer Systems Group / University of Waterloo / Waterloo, Ontario /  N2L 3G1