September 30, 2023


Put A Technology

US Navy pays German company $154,400 after losing piracy lawsuit

US Navy pays German company $154,400 after losing piracy lawsuit

In brief: The US Navy is a pirate, according to the Court of Federal Claims. But this isn’t the skull & crossbones, Blackbeard-style of piracy. The military branch has lost a court case over software copyright infringement and must pay the developer $154,400. But it’s not all bad news for the Navy: the company filing the lawsuit initially wanted $600 million.

German company Bitmanagement Software brought a federal lawsuit against the Navy back in 2016. The complaint claimed the Navy agreed to license the 3D virtual reality software BS Contact Geo on a limited and experimental basis in 2011 and 2012. The trial involved installing the program on 38 computers for testing and integration into the Navy’s systems.

So impressed was the Navy with the software that it allegedly led the developer to believe it planned on purchasing additional licenses for large-scale deployment in 2013. Negotiations took place between 2013 and 2015, during which time Bitmanagement had disabled the copy protection software on BS Contact Geo at the Navy’s request.

Bitmanagement says that despite paying for just 38 licenses, the Navy installed BS Contact Geo on at least 558,466 machines. The Flexwrap software that tracked the number of duplications was disabled in 2014, so the actual number of duplicates could have been even higher.

As the licensing fees for each piece of software cost around $1,067 at the time, Bitmanagement felt it was owed $596 million for the use of its software, leading to a lawsuit against the government. The Navy’s response was a separate court filing claiming that the licenses it purchased allowed additional copies to be made without incurring extra fees. According to the suit, the Navy uninstalled the BS Contact Geo software from all of its computers and “subsequently reinstalled the software on 34 seats, for inventory purposes” after the lawsuit was filed.

The Register writes that Bitmanagement’s original suit was dismissed in September 2019, only to be revived by the Federal Circuit in February 2021. The Navy was found liable for copyright infringement because it never used a Flexera license management application to monitor simultaneous users and decide how many additional licenses would be needed, as stipulated by the license terms.

Importantly, David Kennedy, a Certified Public Accountant (CPA) for Pricewaterhouse Coopers, determined that the price per license amounts to $200, not $1,067. As such, the judge awarded $154,400 to Bitmanagement. The Navy will also have to pay “delayed compensation” at an undetermined later date.