U.S. Government Caught Pirating Military Software, Settles For $50 Million

For years the U.S. military operated pirated copies of logistics software that was used to protect soldiers and shipments in critical missions. Apptricity, the makers of the software, accused the military of willful copyright infringement and sued the Government for nearly a quarter of a billion dollars in unpaid licenses. In a settlement just announced, the Obama administration has agreed to pay $50 million to settle the dispute.

mil-pirateIn recent years the U.S. Government has taken an aggressive stance towards copyright infringement, both at home and abroad.

“Piracy is theft, clean and simple,” Vice President Joe Biden said when he announced the Joint Strategic Plan to combat intellectual property theft.

However, at the same time the Vice President was launching the new anti-piracy strategy, software company Apptricity was involved in a multi-million dollar piracy dispute with the Government.

In 2004 Apptricity signed a contract with the U.S. Army to license enterprise software that manages troop and supply movements. The deal allowed the Government to use the software on five servers and 150 standalone devices, and since then it has been used in critical missions all over the world.

“The Army has used Apptricity’s integrated transportation logistics and asset management software across the Middle East and other theaters of operation. The Army has also used the software to coordinate emergency management initiatives, including efforts following the January 2010 earthquake in Haiti,” the company explains.

While Apptricity was happy to have the Government as a client, the company was shocked to find out that the army had secretly installed thousands of unlicensed copies of the software. This unauthorized use was discovered by accident during Strategic Capabilities Planning 2009, when the U.S. Army Program Director stated that thousands of devices used Apptricity software.

As it turned out, the army had installed pirated copies of the software on 93 servers and more than 9,000 standalone devices. With license fees of $1.35 million per server and $5,000 per device, Apptricity calculated that the Government owed the company $224 million in unpaid fees.

To recoup the missing revenue the software company filed a lawsuit at the U.S. Court of Federal Claims. It accused the Government of willful copyright infringement, while actively concealing these infringements from Apptricity.

“The Government knew or should have known that it was required to obtain a license for copying Apptricity software onto each of the servers and devices,” the company told the court, demanding a minimum of $224,543,420.80 in damages, an amount equal to the shortfall in license revenue.

The Government eventually admitted that it used many copies of the software without permission, and after lengthy negotiations both parties have now decided to settle the case.

“After Alternative Dispute Resolution proceedings, the parties agreed to settle for $50 million. The figure represents a fraction of the software’s negotiated contract value that provides a material quantity of server and device licenses for ongoing and future Department of Defense usage,” Apptricity just announced.

Despite the copyright dispute, Apptricity expects that it will continue its business relationship with the U.S. military.

“Now that this process is behind us, it is envisioned the Apptricity and Army relationship will continue to grow exponentially,” says Tim McHale, an Apptricity senior adviser and retired major-general.

The Obama administration has yet to comment on the settlement but if a statement is forthcoming it will be almost certainly be less vocal on the piracy front, especially since the Government now finds itself on the other side of the fence.

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