U.S. Navy Under Fire in Mass Software Piracy Lawsuit

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In 2011 and 2012, the US Navy began using BS Contact Geo, a 3D virtual reality application developed by German company Bitmanagement.

The Navy reportedly agreed to purchase licenses for use on 38 computers, but things began to escalate.

While Bitmanagement was hopeful that it could sell additional licenses to the Navy, the software vendor soon discovered the US Government had already installed it on 100,000 computers without extra compensation.

In a Federal Claims Court complaint filed by Bitmanagement two years ago, that figure later increased to hundreds of thousands of computers. Because of the alleged infringement, Bitmanagement demanded damages totaling hundreds of millions of dollars.

In the months that followed both parties conducted discovery and a few days ago the software company filed a motion for partial summary judgment, asking the court to rule that the US Government is liable for copyright infringement.

According to the software company, it’s clear that the US Government crossed a line.

“The Navy admits that it began installing the software onto hundreds of thousands of machines in the summer of 2013, and that it ultimately installed the software onto at least 429,604 computers. When it learned of this mass installation, Bitmanagement was surprised, but confident that it would be compensated for the numerous copies the Government had made,” the motion reads.

“Over time, however, it became clear that the Navy had no intention to pay Bitmanagement for the software it had copied without authorization, as it declined to execute any license on a scale commensurate with what it took,” Bitmanagement adds.

In its defense, the US Government had argued that it bought concurrent-use licenses, which permitted the software to be installed across the Navy network. However, Bitmanagement argues that it is impossible as the reseller that sold the software was only authorized to sell PC licenses.

In addition, the software company points out that the word “concurrent” doesn’t appear in the contracts, nor was there any mention of mass installations.

The Government also argued that Bitmanagement impliedly authorized it to install the software on hundreds of thousands of computers. This defense also makes little sense, the software company counters.

The Navy licensed an earlier version of the software for $30,000, which could be used on 100 computers, so it would seem odd that it could use the later version on hundreds of thousands of computers for only $5,490, the company argues.

“To establish that it had an implied license, the Government must show that Bitmanagement — despite having licensed a less advanced copy of its software to the Government in 2008 on a PC basis that allowed for installation on a total of 100 computers in exchange for $30,000 — later authorized the Government to make an unlimited number of installations of its advanced software product for $5,490.”

The full motion brings up a wide range of other arguments as well which, according to Bitmanagement, make it clear that the US Government is liable for copyright infringement. It, therefore, asks the court for a partial summary judgment.

“Bitmanagement respectfully requests that this Court grant summary judgment as to the Government’s liability for copyright infringement and hold that the Government copied BS Contact Geo beyond the limits of its license, on a scale equal to the hundreds of thousands of unauthorized copies of BS Contact Geo that the Government either installed or made available for installation,” the company concludes.

If the Government is indeed liable the scale of the damages will be decided at a later stage. The software company previously noted that this could be as high as $600 million.

This is not the first time that the U.S. military has been ‘caught’ pirating software. A few years ago it was accused of operating unlicensed logistics software, a case the Obama administration eventually settled for $50 million.

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A copy of the motion for partial summary judgment is available here (pdf).

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