The U.S. Army got caught pirating $180 million in software. It’s settling for $50 million.

November 29, 2013

(U.S. Army)

For the Army to function, it needs to keep track of where its soldiers are deployed. So in 2004, it hired a software company to help locate its units down to their exact positions, even if they were in a moving transport vehicle. The Army allegedly liked the solution so much that it wound up installing the program thousands of times more than it was supposed to — and didn't pay for it. Oops.

Now the government is handing Apptricity $50 million to settle the developer's copyright infringement case, a fraction of what the government would actually owe based on the number of missing licenses. The government initially bought a handful of server and device licenses for $4.5 million in 2004. That was followed by another purchase about five years later.

But according to Apptricity's complaint, the U.S. Army then installed the software on another 100 servers and 9,000 devices and didn't come clean until June 2011, after a series of inventory reports revealed the inconsistency. Not only did the Army stall in telling Apptricity about the infringement, the complaint alleges, but the Army also tried to get out of paying by tampering with the software.

"During fiscal year 2010 if  not earlier," the complaint reads, "the Army had engaged another contractor, Future Research Corporation of Huntsville, Alabama, to reverse engineer a portion of Apptricity's software application suite ... to replace certain infringed intellectual property rather than pay for the license shortfall."

Apptricity demanded $225 million in damages. Based on the rates Apptricity was charging the government — $1.35 million per server license, $5,000 per device license — the army owed $180 million for the extra software alone, not including maintenance and labor. By pirating the program, the Army effectively got a 73 percent discount.

Brian Fung covers technology for The Washington Post.
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