Summary
The United States Court of Appeals for the Federal Circuit affirms a Court of Federal Claims judgment awarding $154,400 in copyright infringement damages against the United States Navy for unauthorized use of Bitmanagement’s BS Contact Geo software. Applying the Gaylord hypothetical negotiation framework, the court held that damages under 28 U.S.C. § 1498(b) should be measured by the fair market value of a license covering the government's actual usage rather than a per-copy approach, given the parties' historical licensing practices. The appellate court found no abuse of discretion or clear error in the trial court's factual findings and legal conclusions regarding the damages calculation.
Topics
Practice areas
Questions Presented
- Whether the Court of Federal Claims erred by awarding damages based on a usage‑based hypothetical negotiation rather than per‑copy damages.
- Whether the Navy breached the implied license condition requiring use of Flexera.
Holdings
- The Court of Federal Claims did not abuse its discretion; its damages award of $154,400 is affirmed.
- The Navy’s failure to abide by the Flexera condition breached the implied license, constituting copyright infringement.
Key quotations
“The law does not require that every award of copyright damages be on a per‑copy basis.” (at 8)
“The parties would have adopted a primarily usage‑based approach in a hypothetical negotiation.” (at 12)
Factual background
Bitmanagement licensed its 3‑D graphics software "BS Contact Geo" to the Navy under seat licenses, later converting to a floating license that required the Navy to use the Flexera tracking system. The Navy installed the software on over 429,000 computers, but Flexera failed to limit simultaneous users, leading Bitmanagement to claim copyright infringement.
Procedural history
Bitmanagement sued the United States Court of Federal Claims for copyright infringement by the Navy. The trial court awarded $154,400 in damages based on a usage‑based hypothetical negotiation and excluded the government expert. Bitmanagement appealed, arguing the award should be per‑copy and that the burden of proof was misplaced.