This word clearly goes back to the Joint Photographic Experts Group which was a committee working for the International Standards Organisation. It was established in 1986 and the standard that it worked on was published and approved in 1992. The objective of the committee was to find a way to make image compression possible at no cost.
With reference to this committee, the word had been used in its current form by the (no longer published) Electronic System Design Magazine as early as 1988. JPEG refers to a method of compressing picture data. In the process it shrinks the file size to approximately 10% of the original volume without losing too much image quality.
Much of the early history of JPEG was taken up with patent disputes, after Forgent Networks claimed that they have filed a patent in October 1986, the year the committee had been established. Even though the patent subsequently was declared invalid because of prior art, Forgent managed to make millions in licensing a patent of a methodology the JPEG committee had aimed to establish for general use at no cost.
Finally it appears that the patent has expired and that it can be used without patent rights as had been originally intended.
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