Unisys hold patents (in the US, the UK, and in other countries) that relate to the use of the LZW compression algorithm. Data compressed with this algorithm is an integral part of the GIF file format. It is Unisys's view that creating or decoding GIF files uses their patented technology. As far as I can tell, no one has ever tried to test this view in any court.
Unisys have changed their position on licencing 'their' LZW technology over the years. Currently they require that developers of programs producing GIFs ensure that a royalty is paid on every copy of the program. Note that this is not 'on every copy of the program sold' and applies to software that is provided at no cost. This makes it effectively impossible for software provided at no charge to produce GIFs, unless the developers wish to pay the royalty charge themselves. Thomas Boutell's libgd library is a well known casualty of this ruling (this now produces PNGs rather than GIFs). From the display on what was the original home of ImageMagic http://www.wizards.dupont.com/cristy/ImageMagick/ in January 2001:
"Unisys sent a LZW fright-o-gram to duPont and althought duPont does not feel ImageMagick infringes on their patent it is simply not worth the huge lawyer fees to defend our position. Therefore, to comply with the Unisys threat of legal action, the wizards.dupont.com will go offline November 12, 2000. Instead go to the new ImageMagick site.it is clear that they are still going after authors of such software - personally, I'd expect The GIMP to be next.
Acknowledging however that such software exists, Unisys now consider that the very existance of a GIF file created by software on which a license fee has not been paid also infringes their patents. Websites can license the use of such GIFs from Unisys. Intranet sites, and totally public sites with no third-party advertising or e-commerce services can be licensed for $5,000 (to cover up to 2 servers). Other types of sites can be licensed on application to Unisys. Note that such licensing is not required providing all GIFs are created [by which I assume they probably means 'last run through the compression algorithm'] by already licensed software.
For further information, see the following: