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 unenforcable, 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.