CompuServe Announced GIF Royalties in December 1994. Six Weeks Later, It Backed PNG to Replace GIF.

The PNG image format began as an answer to a royalty announcement in December 1994. In the last days of that month, the online service CompuServe announced that it had agreed with Unisys to collect royalties from authors of GIF-supporting software. The news came “right in the middle of the Christmas holidays,” as Greg Roelofs, who later wrote PNG’s history, put it.

On 4 January 1995, Tom Boutell posted the first draft of a replacement format to three Usenet newsgroups. About six weeks after the royalty announcement, CompuServe itself endorsed that replacement as GIF’s designated successor.

GIF, the Graphics Interchange Format, was CompuServe’s own format. Stephen Wilhite created it there in 1987, and it compressed images with LZW (Lempel–Ziv–Welch), a method Terry Welch had described in a 1984 magazine article. Welch had developed LZW at Sperry, which patented it: US patent 4,558,302, filed in June 1983 and granted in December 1985. When Sperry and Burroughs merged into Unisys in 1986, the patent went to Unisys.

Welch’s article did not mention the patent. In a 1995 account of the dispute, the software developer Michael Battilana wrote that apparently neither CompuServe nor the CompuServe associate who designed GIF had known about the patent. CompuServe and Unisys signed their licence agreement on 21 June 1994, six months before the royalty announcement.

What CompuServe’s licence actually required

On paper, the terms were narrow. A follow-up CompuServe notice dated 4 January 1995 said the licence was aimed at developers of programs “primarily for use in conjunction with CompuServe.” They would pay a $1.00 one-time fee plus a royalty of 1.5% or $0.15 per registered copy, whichever was greater. The notice promised that the deal “will not result in any charges for people using viewers or transmitting GIF images.” Unisys said non-commercial, non-profit GIF applications, including those for the online services and Internet freeware, needed no licence or fee.

Still, GIF now came with a patent licence attached. The rationale that PNG’s authors later published summed up the problem in one line: “GIF is no longer freely usable.”

How volunteers built GIF’s replacement in two months

Boutell called his draft PBF, the Portable Bitmap Format. The discussion grew from Usenet into a mailing list with an associated CompuServe forum. Boutell led this informal working group as its “Benevolent Dictator”: when consensus was impossible, he decided. Roelofs called that role “the most important factor in the group’s progress.”

The new name arrived in Draft 5, on 23 January: PNG, credited to Oliver Fromme. Officially it stands for Portable Network Graphics, but Roelofs wrote that the allure of an unofficial recursive acronym, “PNG’s Not GIF,” “was what decided the matter.”

Tom Lane, the Info-ZIP group and others proposed PNG’s deflate compression, the method also used by zip and gzip. Jean-loup Gailly and Mark Adler rewrote that compression engine for general-purpose use as the zlib library.

CompuServe, meanwhile, announced on 16 January that it was developing its own successor, GIF24. On 7 February 1995 it dropped that project and backed PNG instead, “impressed enough by the design,” as Roelofs put it. By the beginning of March, Draft 9 was out and the specification was officially frozen — “just over two months from its inception,” he wrote.

Design choices still visible in every PNG file

The group chose not to patch GIF. Its published rationale says it could have used GIF with an unpatented compression scheme, “but this would require new code anyway,” so it took the chance to fix some of GIF’s known limitations.

Every PNG file still starts with the eight-byte signature Tom Lane settled on in late January 1995. Its bytes — the value 137, the letters P, N and G, a carriage return and line feed (CR-LF), a control-Z and a final line feed — identify the file and catch common transfer problems. The first byte is not ASCII (plain 7-bit text), so a text file is unlikely to be mistaken for a PNG, and a transfer that clears the top bit of each byte is caught. The CR-LF pair, the rationale says, “catches bad file transfers that alter newline sequences.” The control-Z stops the file from being displayed under MS-DOS, Microsoft’s command-line operating system, and the last line feed catches the reverse newline conversion.

After the signature, the file is a series of chunks, each with its own CRC-32 checksum (a 32-bit cyclic redundancy check), so damaged data can be detected. PNG supports a full alpha channel — a level of transparency for every pixel — where GIF can mark only one palette colour as transparent. Its two-dimensional interlacing scheme, Adam7, named after Adam M. Costello, shows a first, coarse image after 1/64 of the pixels arrive, against 1/8 for GIF, so PNG’s first image comes “eight times faster,” the rationale says.

One feature was left out on purpose: PNG held one image per file, a restriction the rationale calls a reflection of “the reality that many applications do not need and will not support multiple images per file.” Animation stayed with GIF.

Standards, slow browsers and the 1999 GIF scare

The World Wide Web Consortium (W3C) published PNG as a Recommendation, its term for a standard, on 1 October 1996. The two main browsers took longer. Microsoft’s Internet Explorer 4.0 in October 1997 and Netscape’s Navigator 4.04 in November both shipped native PNG support that Roelofs described as “somewhat limited.”

The GIF dispute flared again in 1999. Unisys now asked websites for a $5,000 licence if their GIF images came “from an unlicensed software developer or service.” The newsletter TidBITS reported that Slashdot readers had turned the policy into “a Unisys plot to extort $5,000 from every site that contains GIF images,” and Eric S. Raymond called it a “sleazy attempt at a $5000-per-site shakedown.”

But a site whose GIFs came from licensed software needed no licence of its own, as long as the software’s licence covered that use. Protesters declared 5 November 1999 Burn All GIFs Day. That day, at a march on a Unisys office in Brisbane, California, a company spokesman estimated that about six people had turned up.

The US patent expired in June 2003, and its counterparts in other countries in 2004. GIF never went away. It could animate, and the PNG standard, by design, did not — until June 2025, when the W3C’s third edition of the specification added animated PNG.

What the PNG story shows about file formats

A file format can be designed around the ways its files break. PNG’s signature and per-chunk checksums target the transfer errors of the mid-1990s, such as altered newlines and stripped bits.

A feature left out can have a cost. PNG’s single-image rule matched what many applications needed, and it kept animation out of the PNG standard until 2025.

Open a PNG file in a hex editor today and the first eight bytes still read 89 50 4E 47 0D 0A 1A 0A — the checks a volunteer group wrote into the format in the weeks after a holiday royalty announcement.