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US Navy Caught Red-Handed Engaging in Technical Piracy - Now They Have to Pay Up for It

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A federal court has found the U.S. Navy guilty of piracy and ordered them to pay $154,400 for software copyright infringement.

Bitmanagement Software GmbH, a company based in Germany, brought the accusations forward in 2016, TechSpot reported.

The company accused the Navy of using their 3D virtual reality software BS Contact Geo on 558,466 machines, despite only purchasing 38 copies of the program.

According to the company’s website, BS Contact Geo uses “digital data captured from various sources” such as “land surveys, CAD, satellite imagery,” and “airborne laser scanning,” and turns it into an interactive 3D model.

Bitmanagement Software said that after the Navy tested the software on their systems, the two parties entered into negotiations to purchase additional licenses.

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During that time – between 2013 and 2015 – the company said it disabled the copy protection software on BS Contact Geo at the Navy’s request, according to TechSpot.

By doing so, Bitmanagement Software said the Navy was able to turn 38 copies of the program into at least 558,466 – though the software company believes the number to be much larger, since the Flexwrap software used to track duplications was disabled in 2014.

“Without Bitmanagement’s advance knowledge or consent, the Navy installed BS Contact Go onto hundreds of thousands of computers. Bitmanagement did not license or otherwise authorize these uses of its software, and the Navy has never compensated Bitmanagement for these uses of Bitmanagement’s software,” the company said in court filings, according to Gizmodo.

Bitmanagement Software argued that since each copy of the software cost around $1,067, they were owed $596 million, according to TechSpot.

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The company maintained that “[t]he 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,” Gizmodo reported. “The government nonetheless failed to obtain such licenses.”

The Navy disagreed, saying that the initial purchases allowed the military to create additional copies without paying for additional licenses.

According to court filings, 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 against them in 2016.

The case was dismissed in 2019 but then revived in 2021 by the U.S. Court of Federal Claims. However, the court was not satisfied with the company’s financial damage assessment.

The Navy then brought forward an expert witness, David Kennedy, a certified public accountant, who concluded that the software was worth $200 per license — not $1,067.

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According to court filings, Kennedy argued that the Navy shouldn’t be charged by the number of times they copied the software, and they should instead only pay for the number of copies that they actually used.

The federal claims court agreed with Kennedy, saying that damages “should be assessed for ‘actual usage.’”

According to Kennedy’s calculations, “there were a maximum number of 617 unique users.” Since the Navy already paid for 38 licenses, Kennedy said that there were “579 unlicensed unique users during the damages period infringing.”

The court ultimately found Kennedy’s assessment “fair and reasonable” and awarded Bitmanagement Software $154,400, as well as “delayed compensation” which will be determined at a later, unspecified date.

CORRECTION, Dec. 5, 2022: An earlier version of this article included several incorrect references to Bitmanagement Software GmbH.

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