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Software company wins $154k for US Navy's licensing breach

Court lands on less than the millions asked for after sailors made copies of 3D modeling suite 'hundreds of thousands' of times

In 2016, The Register highlighted the irony of the US Navy being accused of being pirates after it was sued for making "hundreds of thousands" of copies of 3D modeling software without purchasing licenses.

The Court of Federal Claims has now awarded [PDF] Bitmanagement Software GmbH, the German vendor of BS Contact Geo, $154,400 for the Navy's copyright infringement – though it is a far cry from the $596.3 million that the company had originally sought.

The long-running dispute – first filed on July 16, 2016 – claimed in the original complaint [PDF] that Bitmanagement first began working with the Navy on a pilot program in 2011 that called for 38 copies of the software to be installed.

According to the vendor's website, BS Contact Geo is an extensible 3D viewer that "enables you to visualize and interact with state of the art 2D/3D content," based on digital data captured from "various sources (land surveys, CAD, satellite imagery, airborne laser scanning etc)".

Following the trial program, the software developer said that it was led to believe the Navy was going to expand the use of BS Geo by purchasing additional licenses for a large-scale deployment in 2013. During that time, Bitmanagement said it disabled the copy protection software on BS Contact Geo at the Navy's request.

Between 2013 and 2015, while negotiations for the licenses were ongoing, Bitmanagement claims the Navy proceeded to distribute and reinstall BS Contact Geo on at least 558,466 machines, despite only having paid for the initial 38 licenses.

"The government knew or should have known that it was required to obtain a license for copying Bitmanagement software onto each of the devices that had Bitmanagement software installed," the complaint charged.

"The government nonetheless failed to obtain such licenses."

Bitmanagement reckoned that, at a per-copy price of $1,067.76, the Navy owed it roughly $596 million for its use of the software and so sued the US government for multiple violations of copyright law.

But the military branch hit back [PDF], claiming that the licenses it did purchase allowed it to make additional copies of the software without need for further payment.

"Defendant denies that the licenses were limited to installation of BS Contact Geo on a total of 38 Navy personal computers," the filing argued. "Defendant further avers that the Navy procured concurrent-use network-installation licenses of BS Contact Geo."

The Navy asserted that because it had paid Bitmanagement for the software under the terms of its contract, it should not be on the hook for charges for the hundreds of thousands of copies it made and did not owe any additional payments to the company.

Thus the case headed to the Court of Federal Claims, which ruled in an order unsealed Friday that $154,400 is more reflective of the Navy's infringement following a single-day trial in June. The sailors previously admitted to making 400,000 copies BS Contact Geo, but it only had 597 unique unlicensed users.

Judge Edward J Damich dismissed Bitmanagement's original suit in September 2019, saying that the company was aware that the Navy intended to install the software across its intranet and allowed it to go ahead.

But the Federal Circuit revived the case in February 2021, ruling that though Damich was correct to say the license allowed for mass copying, he had not examined whether the Navy had complied with the license terms.

The terms stipulated that the Navy used a Flexera license management application to monitor simultaneous users and figure out how many additional licenses would be needed – but the Navy didn't and was therefore liable for copyright infringement.

Based on a "hypothetical negotiation" and the "actual usage" of the software beyond the licenses paid for, Bitmanagement angled for damages of $155.4 million. The Navy said it was looking at a figure between $115,800 and $200,000.

But after the Navy admitted it "may have" bought an an additional 100 simultaneous use licenses amid failed negotiations with the company, the judge settled on an award of $154,400 to Bitmanagement, with "delayed compensation" to be determined at a later date.

We've asked a Navy spokesperson for comment and will update if we hear back. ®

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