There's not a good free alternative to JPEG (lossy) that I know of. If lossless compression produces small enuf images for your needs, PNG will work. It's only where you're talking about photographic type images that JPEG is really necessary.

As far as I know, the JPEG committee is not trying to adopt or enforce any patents on the standard. The problem is with companies that are trying to enforce their absurd patents against the JPEG standard. The position of the JPEG committee can be found [link|http://www.jpeg.org/newsrel1.html|here].