Gifs and patents

Gif image files use the LZW compression algorithm developed by Abraham Lempel, Jakob Ziv and Terry Welch. The patent for LZW compression algorithm is held by Unisys since 1985. Compuserve Gif uses this algorithm. In 1994, Unisys implemented their patent rights by asking license fees from developers whose products were able to that read or create gifs. This announcement took web developers by surprise (scared the bejeezus out of most people!) and caused quite a stir on the Internet. There were rumours that Unisys might charge web developers for usage of gifs on their sites. At the same time, it was argued that Gifs are the products of LZW compression and the patent does not extend to the usage of the end product. Actually, web developers had nothing to fear since Unisys planned to collect license fees only from software companies whose products employ LZW algorithm.

Web developers should not be worried and are free to use gifs on their web sites. However, if you've developed a software that creates or modifies gifs, you would have to pay licensing fees to Unisys.

The business acumen of the people at Unisys has to be admired. It seems that they had waited for Gifs to become popular and beneficial (from a web develpers' point of view) before implementing the patent rights. However, there was an interesting and fortunate (?) side effect of this story. It lead to the development of the PNG file format. PNG is a much better and more versatile image format than both JPG and GIF. It has all the bells and whistles of these two file formats.
At the time of writing the browser support for PNG is still quite patchy, though the future does look bright.

All's well that ends well, eh?