Bitmanagement Software GmbH v. United States was a copyright case brought by German software developer Bitmanagement against the United States in the Court of Federal Claims in July 2016, after the US Navy installed Bitmanagement’s BS Contact Geo three-dimensional visualisation software on all computers in the Navy Marine Corps Intranet.[1] In 2021 the United States Court of Appeals for the Federal Circuit held that the Navy had an implied licence to copy the software across its network, but that the licence was conditioned on the Navy using a licence server to limit simultaneous users, and that the Navy’s failure to meet the condition made the copying infringement.[1] In 2025 the Federal Circuit affirmed an award of USD 154,400, rejecting Bitmanagement’s claim for USD 85,913,400 calculated at USD 200 for each of 429,567 copies.[2]
Background
Bitmanagement primarily licensed BS Contact Geo through “PC” or “seat” licences, each allowing one installation on one computer. The Navy used the software with SPIDERS 3D, a virtual reality platform for viewing Navy installations. It bought copies through a reseller, Planet 9 Studios: one copy in 2006 for USD 990, 100 copies in 2008 for USD 30,000 and 18 copies in 2012 for USD 5,490.[1] The parties stipulated that there was no privity of contract between the United States and Bitmanagement.[1]
From 2006 the Navy told Bitmanagement that its usual licensing, in which each user contacted Bitmanagement for a computer-specific key, was incompatible with the Navy’s secure intranet. Bitmanagement supplied keys that were not tied to a PC and, in 2007 and 2012, a “silent installer” for bulk installation.[1] In 2011 the Navy asked for a floating licence. Bitmanagement offered three tracking options and the parties chose server-based tracking, using a licence-management server the Navy already ran, which would limit the number of simultaneous users to the number of licences owned. The Navy wrote that this would let it “track the use of the 20 licenses across a broad spectrum of the NMCI realm (versus having those 20 licenses mapped to individual PCs)”, and Bitmanagement replied “[t]hat is our understanding as well”. The 2012 purchase order covered 18 licences to be enabled for that server.[1]
The dispute
The Navy began deploying version 8.001 across the intranet in July 2013, and the software remained on its computers through at least September 2016. The parties stipulated that the licence server “did not monitor or control the use of the BS Contact Geo plugin”, one of the two components of each copy. The Navy bought no further copies.[1] The software eventually was accessible on more than 429,000 Navy computers.[2]
Bitmanagement sued under 28 U.S.C. § 1498(b), the exclusive remedy for copyright infringement by the United States. After a six-day trial the Court of Federal Claims found a prima facie case of infringement and no express licence covering the deployment, but held the Navy not liable because Bitmanagement had impliedly authorised the copying.[1]
Decision or outcome
Liability (2021)
The Federal Circuit upheld the finding of an implied-in-fact licence, based on the parties’ whole course of dealing, and held that the reseller contracts did not rule it out because no express contract mentioned copies and the reseller could not bind Bitmanagement.[1] It noted “grave doubts” about a meeting of the minds when “the parties involved so clearly did not understand the technology”, but deferred to the trial court’s finding.[1]
The court then held that use of the licence server was a condition of the licence, not merely a covenant. Terms are presumed to be covenants, but this was “one of those rare circumstances” where the only feasible explanation for allowing mass copying free of charge was tracking from the time of copying, since tracking was meant to show how many further licences the Navy would buy. Because the plugin component was never monitored, the condition “could not have been met by monitoring only half of each copy”, and the copying fell outside the licence.[1] The court rejected the argument that Bitmanagement was to blame for incompatibility: “The Navy alone was in a position to verify compatibility and ensure that the condition was met.”[1] Judge Newman concurred, finding no licence at all for the Navy to make “hundreds of thousands of copies”.[1]
In a footnote the court said Bitmanagement was “not entitled to recover the cost of a seat license for each installation”, and that damages should reflect “the Navy’s actual usage” beyond the implied licence, through a hypothetical negotiation, with the Navy bearing the burden of proving its usage.[1]
Damages (2025)
On remand the Court of Federal Claims reviewed installation counts and usage logs and found that a hypothetical negotiation in 2013 would have produced 597 additional seat licences at USD 200 and 100 floating licences at USD 350, a total of USD 154,400. It relied on findings that Bitmanagement was in poor financial condition, sold few licences, and had licensed foreign governments for between about EUR 6,000 and EUR 45,000.[2]
The Federal Circuit affirmed. It held that no case “requires that an award of copyright damages invariably be on a per-copy basis”. It distinguished decisions awarding damages for unused copies, including Wall Data v. Los Angeles County Sheriff’s Department, because there the licence terms tied fees to each copy or established seat licences, whereas these parties’ history “included licensed sales based on the number of simultaneous users”.[2] It also held that the trial court had placed the burden of proving usage on the Navy, and that the Navy had produced the best available evidence, including its usage logs.[2]
Significance for software licensing and SAM practice
The case is binding Federal Circuit precedent on claims against the United States and is persuasive elsewhere. It addresses a common situation: software deployed widely on the understanding that a licence server will cap concurrent use.
- Conditions versus covenants. The court treated a technical control as a condition of the licence, which turned a deployment problem into copyright infringement, not just a breach of contract.[1]
- Partial coverage. Monitoring one component of a product while another component ran unmonitored did not satisfy the condition.[1]
- Usage evidence limits exposure. Usage logs allowed the court to value the claim by use rather than by installed copies, reducing a claim of USD 85.9 million to USD 154,400.[2]
- Reseller purchases. Buying through a reseller left the key terms between publisher and customer unwritten, so the court had to infer them from emails.[1]
See concurrent and device licensing for how floating licences are usually counted.
Lessons learned
- A licence that allows unlimited installation in return for usage tracking can make the tracking a condition; if it fails, every copy may be unlicensed. The Federal Circuit held that the Navy’s copying fell outside the implied licence because the agreed tracking did not occur.[1]
- The customer, not the vendor, was responsible for confirming that the agreed tracking actually worked. The court held that any failure by the vendor to supply a compatible installer did not excuse the Navy’s copying.[1]
- Damages followed the licensing model the parties would have negotiated: concurrent use, not copies installed. The court affirmed a usage-based award of USD 154,400 against a per-copy claim of USD 85,913,400.[2]
- Agree licence terms in writing with the publisher, even when buying through a reseller. No contract between the Navy and Bitmanagement covered copying, so years of litigation turned on inferences from correspondence.[1]