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

In short: According to the Federal Court of Claims, the US Navy is a pirate. But it’s not skull and crossbones, Blackbeard-style piracy. The military unit lost a software copyright infringement lawsuit and must pay the developer $154,400. But it’s not all bad news for the Navy: The company that filed the lawsuit initially sought $600 million.

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

The software impressed the Navy so much that it allegedly led the developer to believe that it was planning to purchase additional licenses for a large-scale deployment in 2013. Negotiations took place between 2013 and 2015, during which time Bitmanagement disabled the copy protection software on BS. Contact Geo on Navy request.

Bitmanagement reports that despite paying for just 38 licenses, the Navy has installed BS Contact Geo on at least 558,466 machines. The Flexwrap software that tracked the number of duplicates was taken offline in 2014, so the actual number of duplicates could be even higher.

Because the license fees for each piece of software were worth around $1,067 at the time, Bitmanagement felt it was owed $596 million for using its software, leading to legal action against the government. In response, the Navy filed a separate lawsuit in court alleging that the licenses it had acquired allowed additional copies to be made without additional fees. According to the lawsuit, the Navy removed the BS Contact Geo software from all of its computers and “subsequently reinstalled the software on 34 inventory workstations” after the lawsuit was filed.

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

It is important to note that David Kennedy, Certified Public Accountant (CPA) at Pricewaterhouse Coopers, definite that the license price is $200, not $1,067. Thus, the judge awarded Bitmanagement $154,400. The Navy will also have to pay “deferred compensation” at a later date that has not been determined.

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