The US Government regularly cautions foreign countries for their lacking copyright policies but apparently they are not so good about walking their talk.

Bitmanagement accused the Navy of copying its software without permission. Bitmanagement claimed more than $500 million in damages, but the final amount has yet to be determined.

The dispute started when the US Navy decided that it would like to run the software across its entire network. This meant that it would be installed on hundreds of thousands of computers, with "Flexera" software keeping track of the number of simultaneous users. Bitmanagement didn't offer such a licence by default, so the Navy requested this option separately. These requests took place through a reseller, Planet 9 Studios, which complicated matters.

To be fair, the Navy was convinced that it had permission, but Bitmanagement later disagreed. The problem for the Court was that the Navy and Bitmanagement didn't sign a contract, so there was no direct permission given. This meant that the Court had to review the conversations and exchanges that took place, to determine which side was right.

After reviewing all evidence, the Federal Claims court eventually sided with the US Navy, dismissing the copyright infringement claim.

Bitmanagement maintained that the Navy clearly committed mass copyright infringement and the company took the matter to the US Court of Appeals for the Federal Circuit, this time with success.

In an order issued a few days ago, the Appeals Court agrees with pretty much all conclusions of the Federal Claims Court. The evidence indeed shows that Bitmanagement 'authorised' the U.S. Navy's copying of BS Contact Geo across its network. While this wasn't formalized in an official contract, the Navy had an "implied licence".

Based on this reasoning, the lower court dismissed the case. However, the Appeals Court notes that the evidence doesn’t stop there. The implied licence also required the Navy to “Flexwrap” the software to track simultaneous users. That never happened.

“We do not disturb the Claims Court’s findings. The Claims Court ended its analysis of this case prematurely, however, by failing to consider whether the Navy complied with the terms of the implied licence”, the Appeals Court writes.

“The implied licence was conditioned on the Navy using a licence-tracking software, Flexera, to ‘FlexWrap’ the program and monitor the number of simultaneous users. It is undisputed that the Navy failed to effectively FlexWrap the copies it made”, the Court ruled.

This means that the dismissal is off the table and the Navy is liable for copyright infringement after all. The matter will now go back to the Federal Claims court, to determine the appropriate damages amount.