A RECENTLY-announced decision by Unisys to enforce its patent rights to the compression technology used in a popular PC image file format may have costly repercussions for local on-line service providers. Unisys owns a patent on the Lempel Zev Welch (LZW) compression technology which is a core component of CompuServe's .GIF format. The format has been in use since the late 1980s to produce small-size bitmap image files primarily for storage on on-line services. CompuServe has made the .GIF format freely available as long as programs which can display, manipulate or produce .GIF files contain a two line acknowledgement. As a result, the .GIF format has become a de facto standard in the on-line industry. In 1990, however, Unisys discovered that LZW was being used by programs that use .GIFs and entered into negotiations with CompuServe. The result is an agreement that came into force last week requiring CompuServe to pay Unisys a licence fee of one per cent of the price of any software using LZW it distributes. At the same time, CompuServe is able to sub-licence the LZW technology to producers of software for accessing and using only CompuServe. The on-line service is issuing these sub-licences at 1.5 per cent of the price of the software. When CompuServe announced the agreement earlier this month, it led to an uproar in the on-line community. On the Internet, there was concern that the announcement meant that the .GIF specification was essentially dead, that existing programs which took advantage of .GIFs and, through them, LZW, could no longer be used, and that it was necessary to create an alternative format that would be free. The concern even extended as far as individuals proposing that the Internet community complete the specifications for a new format that could come into use in a five-day period before the January 10 deadline for enforcing the agreement. As a subsequent statement by Unisys made clear, however, the concern was premature. The statement, which was posted to several newsgroups on the Internet, made it clear that Unisys was distancing itself from the timing and handling of the CompuServe statement which many on the Internet interpreted as an attack by Unisys on the on-line community. 'Unisys did not require CompuServe to pass on any fee to its sub-licensees or end users,' the statement read. 'Such a decision, and the content and timing of CompuServe's advisory, was at their discretion. '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 industry.' CompuServe in Hong Kong was unable to provide an official comment at press time about the timing and effect of its original advisory, although it did say Unisys' statement was an accurate picture of the licence terms. According to the Unisys statement, existing software can continue to be used without any payment of licence fees. The decision to enforce licence fees only applies to new software and to new updates starting this year. In addition, any company can take out a licence directly from Unisys for applications that are not specifically for accessing CompuServe. At the same time, no fees will be payable on software that is freely distributed to the general public. Locally, this may have an impact on some local on-line service providers who distribute customised interface software to their members. Local service Asia On-line, for instance, which provides Internet access and a host of other information services, is developing its own graphical interface to run under Windows 95. The software can handle .GIF files. According to a Unisys spokesman, software distributed to a limited membership, even free, does not constitute freeware and would be subject to licence fees. 'If software is only given to members, then it is not free,' the spokesman said. 'The commercial value of such use would be determined as part of the negotiation process.'