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The US Navy has to pay $154,400 in damages for copyright infringement to German software company Bitmanagement. The US Federal Claims Court awarded the compensation after it was found that the Navy copied and used the software without permission. Whether Bitmanagement will celebrate this win is up for question as the damages are less than 0.1% of the $155 million it sought.
The lawsuit was filed by German company Bitmanagement. It wasn’t a typical piracy case where software was downloaded from suspicious sources, but the end result was the same.
It all started in 2011 when the US Navy began testing Bitmanagement’s 3D virtual reality application “BS Contact Geo”. The Navy then installed the software over its network, assuming it had permission to do so.
This turned out to be a crucial misunderstanding. Bitmanagement said it did not authorize this type of use, and when it discovered the Navy had installed the software on hundreds of thousands of computers, the company took legal action.
In a complaint filed with the US Court of Federal Claims in 2016, the German company accused the US Navy of collective copyright infringement and sought damages running into hundreds of millions of dollars.
The court initially dismissed the complaint, so Bitmanagement appealed. Last year, the Court of Appeals for the Federal Circuit sided with the German software company, concluding that the US government was indeed responsible.
The matter was returned to the Court of Federal Claims, to determine the appropriate award amount through a “virtual negotiation” process in a behind closed doors trial.
Millions or thousands of damages?
Over the past several months, the court has heard both sides and seen crucial expert witnesses. The goal was to determine what the Navy would have paid for the software licenses if an agreement had been reached.
The court also had to decide how many copies the Navy should pay compensation for. Bitmanagement claimed over 600,000 copies were installed but an appeals court determined that damages must be based on “actual use” of the software.
In reaching its final ruling, the Court of Federal Claims relied in part on the testimony of Navy expert witness David Kennedy, who has extensive experience bringing damages claims.
After reviewing various log files, Mr. Kennedy concluded that the program was used by a few hundred unique users at most. In addition, he thinks it reasonable for Bitmanagement to agree to a price of up to $200 per license.
This figure is down from the previously negotiated $370 per install. However, the expert witness believes that this was justified due to the large size of the deal and the fact that the software company’s cash position was rather low at the time.
Court awards $154,400
Federal Claims Court Judge Edward J. Damic very much agrees with this expert opinion. In his application, he awarded $154,400 in total damages.
The damage figure is based on 635 unique users and a $200 license fee. The court also awards an additional $350 for each of the 100 simultaneous use licenses that the Navy would have approved.
Justice Damish notes that these conclusions are supported by “objective considerations,” adding that the amount of compensation is “fair and reasonable.”
Whether Bitmanagement agrees with this conclusion remains to be seen. The company sought $155 million in damages, arguing that the Navy had installed 600,000 copies of its software, for which it was supposed to pay about $259 a piece.
The $154,400 award is a small portion of the claim, even if we add compensation for late compensation, which will be generated later.
A copy of the Court of Federal Claims order, awarding Bitmanagement $154,400 in damages for copyright infringement is available here (pdf)