The GIF program, which is used by software developers, was used to a large extent by software developers who needed to use the software to compress images. The software was made available to software developers by CompuServe Information Systems. The software, however, used the LZW algorithm which was patented by Unisys . Software companies often employ numerous and diverse programmers to come up with software which they can obtain patents for, to avoid others from using the product or creating others that are identical until the patent has run out. The patent also allows the patentees to sue anyone who happens to duplicate the patent software without consent from the patentee. A patent is offered to anyone who successfully comes with a useful creation on their own and wishes to prevent others from creating identical products, or making economic gains from the product without their consent. A Software is a program which is designed by specialists, to perform various functions. The LZW algorithm by the Unisys was put in place to assist the software developers to compress images for software designers, by converting images into numbers which are easier to store on computerized systems . There is other software in the market which are used to perform the same function, but they are not as effective. CompuServe had no option but to get into an agreement with Unisys in which they were to pay a certain amount as royalty to the company, and part of the revenue made from the GIT software was to be paid to Unisys. Developers of the software would normally have a copyright, on the software but since they developed the software for the employer they have no rights to the software.
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The LZW patent held by Unisys on its algorithm which was used by CompuServe Information System in the GIF software makes it withhold the right to use the software. To continue using the LZW algorithm in their GIT software, CompuServe had to get into an agreement with Unisys, to avoid legal charges. A patent reserves the right to market a product to the creator of the software, up to 17 years after the creation of the software . Although the software was first created in 1984, Unisys only obtained a patent for the software in 1985. Software designers and anyone who wishes to use the GIF software can also be held liable for the LZW patent. In this case, CompuServe introduced certain charges as license which was to be charged to the users of the GIF software, which had earlier on been used by software designers for free. Unisys was demanding for compensation for the utilization of some of the LZW algorithm, and these charges were spilled over to the software designers. In its defense, CompuServe was only charging software designers so that they could pay Unisys, and they had no intention of profiting from the agreement . The patent affected all the stakeholders in the industry since most CompuServe had incorporated the GIF software in many of its programs, and losing the accessibility to the LZW algorithm would cause major drawbacks to the company. CompuServe was expected to pay the amount of 125, 000 USD as royalty to Unisys after the signing of the agreement, 1 USD as a onetime fee for every newly licensed software developer, and 1.5% as royalty for every software they sold . The prices on these products shot up, and hence, everyone in the chain including the end consumer was affected. The software was being used by many stakeholders such as media houses, celebrities and individuals to store their images.
Indemnification is used in Service Level Agreements in which one party is expected to compensate the monetary costs for the losses incurred by another party. The case of CompuServe caught the attention of online users when they were made aware of the fact that they were expected to pay certain charges for the GIF software which they had earlier on accessed online for free. The patent gives the owner the right to demand compensation for the utilization of their software or creation. Since the algorithm was incorporated in the GIT software which was owned by CompuServe, the liability fell directly on them. The rules of the patent apply from the moment a patent is obtained, up to the next 17 years. CompuServe had used the LZW algorithm since 1984, and the patent had been obtained by Unisys since 1985. It was therefore mandatory that CompuServe paid Unisys for using their algorithm without their consent, failure to which Unisys could sue CompuServe. The two companies got into an agreement in which CompuServe and Unisys were the sole owners of the GIT software, and Unisys had allowed CompuServe to use the LZW algorithm in their programs provided that Unisys was notified before the creation . If a software provider used the LZW algorithm after accessing it through the GIT software which was made available by CompuServe, CompuServe could not be held liable indemnifying CompuServe from such a liability.
Works Cited
Conway, Benjamin. "Outrage in Cyberspace: CompuServe and the GIF Patent." Havard Business Review (1996): 1-31.
