FYI - Unisys press release of 95 JAN 06

Ross, Phil W [BB] (
Tue, 10 Jan 1995 02:35:43 +0100

January 6, 1995

Unisys Clarifies Policy Regarding Patent Use in On-Line Service Offerings

The concerns, inquiries and some apparent confusion that have resulted from
the December CompuServe advisory clearly indicate that we need to clarify
our policy concerning the use of the Unisys Lev Zempel Welch (LZW) patent by

software developers for the major on-line services.

We want to reiterate earlier communications that the issue of patent
licenses is not focused on the end users of on-line networks, including the
Internet. We encourage end users to continue to take full advantage of the
outstanding benefits of a rapidly growing on-line community.

Unisys was awarded the patent in 1985. We became aware of the increasing
interest in our LZW patent beginning in 1990 when many companies approached
us to license the patent for their hardware and software products. The
growth in the use of compression technology was mushrooming in order to meet

the demands for transmitting increased amounts of data. To date, more than
100 companies, including hardware, software and on-line information
services, have licensed the Unisys LZW technology.

Two years ago, Unisys learned that the LZW method was incorporated in the
GIF specification and immediately began negotiations with CompuServe in
January of 1993. We reached agreement with CompuServe on licensing the
technology in June 1994, which calls for CompuServe to pay Unisys a royalty
of 1% of the average selling price it charges for its software. This
represents approximately 11 cents for each copy sold and connected to its
information service.

Under the agreement, CompuServe, at its discretion, could relicense the LZW
technology to commercial developers using the GIF specification in software
that connected directly to the CompuServe information service.

With the agreement completed on June 21, 1994, CompuServe was given six
months to implement the terms of its license. CompuServe later asked for a
one-month extension, which we granted.

Unisys did not require CompuServe to pass on any fee to its sublicensees or
end users. Such a decision, and the content and timing of CompuServe's
advisory, was at their discretion.

Consistent with the entire information industry's desire to protect
intellectual property, Unisys will expect all of the major commercial
on-line information services companies employing the LZW patent to license
the technology from Unisys at a reasonable rate. The on-line service
companies are not required to sublicense the technology to developers
producing software for the commercial on-line services. It will be, as it is

today, at the on-line service's discretion as to whether it charges a
license fee to developers or chooses an alternative method to account for
its licensing fees payable to Unisys.

We recognize and are concerned -- thanks in large part to the recent and
very active use of the on-line network -- that developers did not understand

that the patented technology was resident in GIF. Taking that into account,

Unisys does not intend to pursue previous inadvertent infringement by
versions of GIF-based software products marketed prior to 1995.

Concerning all future software product development and enhancement of
existing products for accessing on-line services, Unisys expects developers
of commercial, for-profit software to secure a license from Unisys, or
through the licensed on-line service, for the use of the patented
technology. The very reasonable terms should prove no financial barrier to
the introduction of product into the on-line network.

Unisys does not require licensing, or fees to be paid, for non-commercial,
non-profit GIF-based applications, including those for use on the on-line

Concerning developers of software for the Internet network, the same
principle applies. Unisys will not pursue previous inadvertent infringement

by developers producing versions of software products for the Internet prior

to 1995. The company does not require licensing, or fees to be paid for
non-commercial, non-profit offerings on the Internet, including 'Freeware'.

Commercial developers of GIF-based software for the Internet are expected to

secure a licensing agreement with Unisys for software products introduced
beginning in 1995, or enhancements of products that were introduced prior to

1995. Again, terms should not preclude the entry by these firms into the

For organizations introducing World Wide Web servers and 'Home Page'
offerings, most will not be required to secure a license from Unisys. Most
organizations acquire software from other developers to create their
offerings on their servers. Therefore, only the software firms who sell the

enabling software for profit would be expected to secure a licensing
agreement from Unisys.

Unisys understands that this issue has caused concern. We want to reassure
all users and developers that we are strong proponents of the on-line

We're proud that this important Unisys technology has played a role in the
introduction of innovative products and services, many of which are fueling
the explosive growth of the information superhighway.

As members of the information community we want to strike the appropriate
balance between information access and the rights of all information
companies, including the developers of software, to protect their
intellectual property rights.

Patent information: Contact Welch Patent Licensing Department; Unisys; Mail

Stop C1SW19; P.O. Box 500, Blue Bell, PA 19424.

Or via Internet, send E-mail to LZW_INFO@UNISYS.COM, or use a form available

on the Home Page of the Unisys Web Server ( to request

follow-up information.

Media contacts: Unisys Public Relations -- Bob O'Leary (215) 986-6413
or Oliver Picher (215) 986-5367