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Intellectual Property Rights
10/31/2008

Pakistani man sentenced to 4 1/2 years for reselling phones

HOUSTON - A Pakistani man living in Richmond, Texas, was sentenced Friday to almost five years in federal prison for violating an injunction entered against him by the U.S. District Court of the Southern District of Texas in a civil case filed by Virgin Mobile USA, LLC (Virgin Mobile) by selling and attempting to export "reflashed" Virgin Mobile cellular telephones. This sentence was announced by U.S. Attorney Don DeGabrielle, and U.S. Immigration and Customs Enforcement (ICE) Special Agent in Charge Robert Rutt.

At the Oct. 31 hearing, U.S. District Judge Melinda Harmon found Muhammad "Mubi" Mubashir, 28, had exported 12,964 Virgin Mobile telephones that had been or would be "reflashed" in violation of U.S. copyright laws, breaching the buyers' contracts with Virgin Mobile and in violation of the civil injunction. The court sentenced Mubashir to 57 months in prison to be followed by three years of supervised release. Mubashir pleaded guilty to the criminal contempt charge in May. Mubashir remains on bond awaiting an order from the court for him to surrender to a Bureau of Prisons facility.

At his re-arraignment hearing in May, Mubashir conceded that on Aug. 10, 2006, a final judgment and agreed permanent injunction was entered in the U.S. District Court for the Southern District of Texas in a civil action filed against him and two other individuals for copyright infringement in July 2006 by Virgin Mobile, World MMP Inc. Under the terms of the judgment, Mubashir was permanently directed not to purchase, offer to purchase, resell, offer to resell, ship and tamper with the software, or induce or solicit any other person or do the same to any Virgin Mobile wireless handset, including, without limitation, the Kyocera K10 wireless handset.

Despite the court's injunction, on May 9, 2007, Mubashir's company, Americas Wireless, attempted to export to Yeng Fung Trading Co. in Hong Kong a shipment of 46 Virgin Mobile cellular phones displaying the Virgin Mobile name and logo. The shipment was discovered by an ICE agent and a U.S. Customs and Border Protection (CBP) officer at Eagle Global Logistics (EGL). The following day, the agents inventoried the shipment with assistance from a Houston Police Department officer. In addition to the cellular phones, they discovered documents showing the phones had been purchased on April 1, 2007 by Americas Wireless in San Antonio for $35 each or a total of $1,610. Other cellular phones were purchased on the same invoice for a grand total of $38,218.

The final judgment and injunction which ultimately led to the criminal contempt charge filed by the United States in November 2007 against Mubashir, resulted from a civil suit filed in July 2006 by Virgin Mobile against Mubashir and others. The civil suit alleged Mubashir and others were acquiring - for unauthorized, non-personal use - significant quantities of Virgin Mobile wireless handsets sold through retail stores at prices below their cost for the benefit of Virgin Mobile's customers, then reselling the handsets in bulk to customers both in the United States and abroad.

As part of this scheme, copyrighted locking software installed in each handset to limit its use to Virgin Mobile service was modified, erased or otherwise altered so that the handsets would operate on wireless services other than Virgin Mobile's service, in contravention of the terms governing the handsets purchase and in violation of the Digital Millennium Copyright Act, 17 U.S.C. Section 1201, et. Seq. Five months after the entry of the court's injunction and several months before the filing of the criminal contempt complaint by the United States, the court had held Mubashir in contempt for a previous violation and ordered him to pay all costs associated with the court's judgment and attorney's fees.

This case was investigated by ICE with assistance from CBP and the Houston PD. Assistant U.S. Attorney Jay Hileman, Southern District of Texas, prosecuted this case.