It's too bad that analysis of Intel's Pentium debacle hasn't had time to make it into the Business 101 textbooks. If it had, then CompuServe's MBAs might have avoided "GIFgate," a fiasco involving CompuServe's GIF file format and the Unisys-patented LZW compression algorithm. Although still unfolding, the story has had more twists and turns than Newt Gingrich explaining his book deal.
To recap: During the post-Christmas holiday lull, CompuServe shocked developers who use the Graphics Interchange Format (GIF) with the announcement that they had to register their use by January 10, 1995, and begin paying royalties of 1.5 percent or $.15/unit, whichever is greater. The demand was based on an agreement hammered out between CompuServe and Unisys more than six months earlier. GIF, which is copyrighted by CompuServe, is built upon Unisys's LZW compression algorithm.
According to a prepared statement, upon learning of GIF's use of LZW in 1992, Unisys "immediately" began negotiations with CompuServe. A licensing agreement was subsequently reached in June 1994, which required CompuServe to pay Unisys a royalty of 1 percent of the average selling price (or about $.11/copy) charged for the CompuServe Information Manager connection software. Additionally, CompuServe had to pay a one-time fee of $125,000 for past use, and, we've since been told, an ongoing $5000 monthly fee. As part of the agreement, CompuServe also got the rights to relicense LZW technology to commercial developers who use the GIF specification in software that connects directly to the CompuServe information service.
Money aside, one problem developers had with this announcement is that the GIF specification has been publicly available for years--since 1987, in fact--and CompuServe has encouraged its free use by developers. The only string attached to developer's use of GIF was that source code implementing the GIF spec must maintain CompuServe's copyright notice. Through CompuServe's encouragement, GIF has been widely implemented, becoming the de facto file format for graphics interchange on the Internet as well. Now, said the information service, it's time to pay the piper.
Developers immediately raised a ruckus, along with a number of serious questions needing answers. Feeling the heat of a coming firestorm, Unisys quickly tried to put the onus on CompuServe. For instance, in response to the charge that CompuServe was in violation of a six-month implementation agreement, Unisys stated that CompuServe asked for, and was granted, a one-month extension. Unisys also made it clear that the agreement did not require CompuServe to relicense LZW technology--CompuServe did so at its own discretion.
Still, a number of serious questions have yet to be adequately answered. For instance, do the terms of CompuServe's developer agreement suggest that GIF can only be used to support CompuServe-related software? (Maybe that's the intent, since confining GIF to CompuServe would put the brakes on Internet browsers such as Mosaic, thereby buying CompuServe time in combating what's become its biggest rival.)
The latest upshot, as of this writing anyway, is that CompuServe is proposing "GIF24," a free-of-charge update to the current GIF89a specification. The good news is that GIF24 is supposed to be based on Huffman encoding, not LZW. The bad news is that the GIF24 spec won't be available until the end of the year.
In the meantime, Unisys believes it has discovered a gold mine. The company is actively going after online-related developers who write commercially available LZW-based software.
In the long term, GIF as we know it today will likely go by the wayside, as developers turn to nonpatented compression alternatives such as Huffman encoding. Pat Clawson of TeleGrafix has proposed one such alternative for GIF files. However, before the algorithm can be implemented for GIF, he'll need CompuServe's permission. CompuServe's response will tell a lot about what kind of company it really is.
Jonathan Erickson
Editor-in-chief
Copyright © 1995, Dr. Dobb's Journal