4DD Holdings v. United States copyright case involving government use of intellectual property and copyright damages
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4DD Holdings, LLC v. United States: Copyright Damages Cannot Depend on Perfect Hindsight

ByGeorge Sciarrino

On July 16, 2026, the Federal Circuit reviewed a $12.7 million copyright award involving the government’s unauthorized use of healthcare software. It upheld the use of a hypothetical negotiation rather than the parties’ existing license rates, including consideration of alternative software and volume discounts.

The court nevertheless vacated portions of the award because the lower court relied on the government’s later abandonment of the project. Under the “book of wisdom” doctrine, later evidence may clarify a license’s value when infringement began but cannot impute knowledge of unforeseeable events. Other evidence, however, might support the same result on remand. The court also held that the government may owe compensatory damages under 28 U.S.C. § 1498(b), but not enhanced statutory damages for willful infringement.

CASE EFFECT

Proving infringement and proving damages are separate tasks.

Licenses, pricing records, negotiations, implementation costs, and contemporaneous valuations can establish what reasonable parties would have agreed to when infringement began. Later evidence may clarify that value, but hindsight cannot replace their expectations at the time.

Founder and Managing Attorney of SCIO Law with more than 12 years of experience advising Fortune 500 companies, internationally recognized brands, businesses, entrepreneurs, and creators on complex intellectual property, commercial, and litigation matters. Admitted to practice in Florida, New York, and New Jersey, George also serves as a FINRA arbitrator. His published work has been cited in law reviews, and he is the founder and editor of Case & Effect.

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