Bruhn NewTech v. United States, 16-783C
| Decision Date | 23 August 2019 |
| Docket Number | No. 16-783C,16-783C |
| Parties | BRUHN NEWTECH, INC., et al., Plaintiffs, v. UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
Liability Trial; Contract Disputes Act; Breach of Contract; Copyright Infringement.
Steven J. Lewicky, Lewicky, O'Connor, Hunt and Meiser, LLC, Fulton, MD, for plaintiffs.
Scott D. Bolden, Deputy Director, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, D.C., for defendant. With him were Arthur Samora, Agency Counsel, Department of Navy, Nicholas Kim, Trial Attorney, Commercial Litigation Branch, Carrie Rosato, Trial Attorney, Commercial Litigation Branch, Gary L. Hausken, Director, Commercial Litigation Branch, and Joseph H. Hunt, Assistant Attorney General, Civil Division, Department of Justice, Washington, D.C.
In the above-captioned case, plaintiffs Bruhn NewTech, Inc. (BNT-US) and Bruhn NewTech, A/S (BNT-Denmark) filed a second amended complaint against the United States. In Count I of the second amended complaint, BNT-US asserts a breach of contract claim against the United States. In Count II of the second amended complaint, BNT-Denmark asserts that the United States infringed two of BNT-Denmark's copyright registrations. The court held a trial on liability on both of plaintiffs' counts in the second amended complaint.
BNT-US is a wholly-owned subsidiary of BNT-Denmark, and BNT-US was incorporated as a Delaware corporation in 1996. BNT-Denmark is a Danish corporation that sells computer software referred to as "NBC-Analysis," which is software used in military systems to track and analyze chemical, biological, radiological, and nuclear (CBRN) agents in military and civilian environments.
The parties have stipulated that the primary functions of NBC-Analysis software are predicting, warning, and reporting CBRN events based on informational inputs provided by NBC-Analysis users, as well as "other reliable sources." The output the NBC-Analysis software generates is consistent with the CBRN reporting standards articulated in North Atlantic Treaty Organization (NATO) Allied Tactical Publication 45 (ATP-45). NATO periodically revises the CBRN reporting standards set forth in ATP-45. When NATO revises ATP-45, BNT-Denmark updates its NBC-Analysis software to ensure compatibility with the CBRN reporting standards in ATP-45. The parties have stipulated that BNT-Denmark "released" "versions of" NBC-Analysis software compatible with ATP-45B from 2003 to 2005. From 2006 to 2009, the parties have stipulated that BNT-Denmark "released" "versions of" NBC-Analysis software compatible with ATP-45C. In 2011, BNT-Denmark updated its NBC-Analysis software to be compatible with NATO's ATP-45D.
During trial in the above-captioned case, the court heard testimony from Jacob Nielsen, who described himself as being the "CEO [chief executive officer] of Bruhn NewTech from May of 2005 until February of 2017," and who stated that, as CEO, he was responsible for managing the operations of BNT-Denmark, BNT-US, and a different Bruhn NewTech subsidiary based in the United Kingdom. According to Jacob Nielsen, Bruhn NewTech was founded in the 1980s by two software engineers who had previously served in the Danish military. Jacob Nielsen asserted that the two software engineers were the first individuals to create a software program used to predict the "outfall" of nuclear weapons in accordance with established NATO standards. Jacob Nielsen indicated that the relevant NATO standards initially only concerned nuclear weapons, but that the NATO standards became more complex over time. Jacob Nielsen also testified that "almost" "100 percent" of NBC-Analysis sales were to NATO countries, including, among other countries, Denmark, Italy, Norway, the United Kingdom, and the United States. When Jacob Nielsen began his employment with Bruhn NewTech in 2005, Bruhn NewTech's largest source of revenue was from contracts with the United States. According to Mr. Nielsen's testimony at trial, BNT-Denmark established BNT-US because DNT-Denmark was "not able to work for the U.S. Government with engineers other than engineers based in the U.S. for security reasons."
During his testimony, Jacob Nielsen described the functions of NBC-Analysis software as:
[A] Joint Warning and Reporting System, and that's basically what it does. So it takes in information about incidents of any of the kinds of -- nuclear, biological, chemical incidents -- and it takes those information in, and it computes and predicts the outcome of this, and it will also then send outinformation to parties that have been logged in the software, that they should be warned and they should do this, that, or the other.
BNT-Denmark and BNT-US sold NBC-Analysis software in either a "dongled" format or an "undongled" format. Dongled software is protected by a hardware "dongle," which the parties describe as a "physical device with associated software or firmware that must be inserted into the computer" in order to prevent "NBC-Analysis from being used on any computer other than a computer that has a security dongle plugged into it." Undongled versions of NBC-Analysis software "have the physical capacity to be replicated and copied, but the terms of the license under which the software is delivered legally restrict the extent to which the software can be replicated and copied." BNT-Denmark and BNT-US also have sold NBC-Analysis software to governments under a "national license," which the parties have stipulated means that "NBC-Analysis may be freely used throughout the nation's armed forces and government, but only in a manner consistent with the terms of the negotiated national license." Under a national license, a government would receive an undongled version of NBC-Analysis software. According to the parties' joint stipulation of facts, when selling NBC-Analysis under a national license, BNT-Denmark and BNT-US would "always offer a support and maintenance service contract for NBC-Analysis," which the parties indicate is known as a Software Upgrade and Maintenance Agreement (SUMA). The parties also have stipulated that the SUMA provides the majority of BNT-US's and BNT-Denmark's revenue and profit under a national license contract.
Jacob Nielsen testified at trial that "the U.S. engineers would be doing the U.S. adaptations to our core" NBC-Analysis software, while the "Danish engineers would be developing along the lines of the annual updates, new functionality and new adaptations, to be sold throughout the world as a standard product." Mr. Nielsen also stated that the engineers working in Denmark for BNT-Denmark were responsible for keeping the NBC-Analysis software current and compliant with evolving NATO ATP-45 standards. Similarly, plaintiffs' former employee John O'Donahue, who was offered by plaintiff as an expert witness, and who testified at trial that he was a software engineer, as well as a manager, for BNT-US from July 2001 to August 2006,2 stated that BNT-US customized NBC-Analysis for the United States military, such as "the addition of these sensors" and "deployment of the application on different platforms." According to John O'Donahue, BNT-Denmark was responsible for ensuring that Bruhn NewTech's NBC-Analysis software was current and compliant with the NATO ATP-45 standards.
Jacob Nielsen testified that, either at the end of 2012 or the end of 2013, BNT-US was reduced to having approximately one employee because "[t]he business went away." Jacob Nielsen also stated that, as CEO of Bruhn NewTech, he was the individual that decided to limit BNT-US' operations to approximately one employee. In plaintiffs' post-trial brief, plaintiffs also assert that there were insufficient business opportunities related to NBC-Analysis to justify continuing BNT-US' business operations as of the end of 2012.
On May 13, 1998, the United States Marine Corps (USMC) awarded Contract No. M67854-98-C-2076 (the '2076 Contract) to BNT-US, which was a fixed-price contract. According to the parties' joint stipulations of fact, BNT-US delivered software and support services under the '2076 Contract "for at least two years" after the "effective date" of the '2076 Contract. The parties have stipulated that, under the '2076 Contract, BNT-US provided "NBC-Analysis software packages to the USMC to be used as the software component to the Joint Warning and Reporting Network Program (JWARN)." The '2076 Contract required BNT-US to deliver "the NBC Analysis Software packages (license, media, documents)" to the USMC "in accordance with the requirements listed in the JWARN PD [Purchase Description]."3 The statement of work in the '2076 Contract indicated that the JWARN software was to provide analysis of nuclear, biological, and chemical detection information and was to automate nuclear, biological, and chemical warning and reporting for the United States Army, United States Navy, United States Air Force, and USMC. Section 1.1 of the statement of work stated that the scope of the '2076 Contract entailed "the delivery of the commercial software component of JWARN, the NBC Analysis program, and subsequent post-fielding support." The '2076 Contract's purchase description stated that the NBC-Analysis software must operate on the battlefield and provide military units with an overview of the nuclear, biological, andchemical situation in the area of operations. The parties have stipulated that the software delivered under the '2076 Contract was commercial-off-the-shelf software.
The '2076 Contract contained Federal Acquisition Regulation (FAR) clause 52.227-19, titled "COMMERCIAL COMPUTER SOFTWARE--RESTRICTED RIGHTS (JUN 1987)." (capitalization in original). In the '2076 Contract, FAR clause 52.227-19 was supplemented with the following terms:
To continue reading
Request your trial