$13 Million Judgment on Behalf of Veteran-Owned Software Developer in Software Copyright Infringement Trial Against the United States Government

4DD Holdings, LLC v. The United States of America

Robins Kaplan LLP obtained a nearly $13 million judgment on behalf of its client 4DD Holdings, LLC—a veteran-owned developer of complex data federation software —in a complex software copyright infringement lawsuit against the United States resulting from the Government’s breach of a software license agreement. After a two-week trial in the Court of Federal Claims, the Court affirmed that the Government infringed 4DD’s valid copyright when it created tens of thousands of unlicensed copies of 4DD’s proprietary software and awarded damages to 4DD for lost licensing fees. In addition, the Government was ordered to pay $1.1 million in sanctions for destruction of evidence.

The dispute dates to 2013 when the Government selected 4DD’s data federator software called “TETRA Healthcare Federator” to support its multi-billion-dollar health record interoperability project between the Department of Defense and Department of Veterans Affairs. As the Court held in its opinion, over the course of the project the Government and its contractor made tens of thousands of unauthorized copies of TETRA in direct violation of 4DD’s license terms. The Court disagreed with the Government’s attempt to avoid liability for certain software copies that were allegedly not fully configured or associated with computer cores, holding that these were not only copies under the Copyright Act, but that they were infringing copies made beyond the scope of the license. The Court also held that the Government failed to prove its affirmative defenses, finding that “the Government fraudulently and materially misrepresented the extent of its copying” thus invalidating a potential release of 4DD’s claim, and finding that 4DD was not equitably estopped from bringing its copyright claim.

This lawsuit has potentially broad implications for companies that license software to the government, including with respect to drafting effective license agreements and ensuring compliance with licensing terms.

Post trial briefing is ongoing.