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August 27, 1998


By CBR Staff Writer

The pall hanging over Canadian software house Corel Corp got a little thicker yesterday with the news that in settling a patent infringement lawsuit with Unisys Corp, Corel will pay Unisys licensing fees for a Unisys-patented compression/decompression technology that Corel has been using without a license in most of its products since 1995. It has also signed an open-ended licensing fee going forward. Unisys would not say how much the settlement was worth, or how much it was going to cost Corel, and Corel didn’t want to say anything at all. Lempel Ziv and Welch (LZW) were three engineers working for Sperry in the 1980s. Terry Welch extended work started by the other two to develop a method of compressing and decompressing digital data. Sperry received a patent for LZW in 1985 and the following year merged with Burroughs to form Unisys. LZW is used in the GIF graphics file compression format to store images, the standard of which was defined by CompuServe Corp. In June 1994 CompuServe settled on a one-time licensing fee with Unisys, believed to be in the region of $125,000. In the early 1990s Unisys had only about a hundred licensees but it now has about 1,500, thanks largely to increase in the use of graphics files and their exchange over the internet. It says it was not aware the LZW technology was used in GIF until 1993 and claims it has not been actively pursuing potential infringers of the patent – the CompuServe case excluded, presumably. CompuServe went on to champion the alternative, non-patented Portable Network Graphics (PNG) file format, which was awarded the status of a recommendation by the W3C last October. Corel uses the technology in most of its products, including WordPerfect, Draw and Presentations. WordPerfect apart, almost all of Corel’s packaged applications deal with graphics to some extent or another. Unisys holds the patent in the US, Canada, France, Germany, Japan, Italy and the UK. Ironically, in the resource guide for import and export conversions for Corel Presentations version 8, Corel advises users that the GIF filter in the application always makes use of LZW compression technology, a license from Unisys is required for use. It’s a pity the company’s legal department did not heed that advice. Little attention is paid by the markets to Corel’s shares these days, and they closed down just a sixteenth at $1.3125.

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