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Intellectual Property Rights

Wichita Falls, Texas, man, pleads guilty in federal court to copyright infringement of computer software

WICHITA FALLS, Texas – A local man pleaded guilty on Thursday before U.S. Magistrate Judge Robert K. Roach to one count of copyright infringement, announced U.S. Attorney James T. Jacks of the Northern District of Texas.

James Clayton Baxter, 28, of Wichita Falls, Texas, who is presently in federal custody, faces a maximum statutory sentence of five years in prison and a $250,000 fine. In addition, he could be ordered to pay restitution. Sentencing is scheduled for Oct. 25.

According to documents filed in the case, from June 8, 2006 through April 9, 2007, Baxter infringed the copyrighted works of Adobe Systems Inc. by reproducing copies of their software for his financial gain. The investigation into Baxter's activities began in May 2007 when U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) was notified by investigators working for Adobe that they had purchased infringing software from TechKappa.com, a website that sold copies of software titles via download from the Internet. The investigation led ICE HSI investigators to Baxter's residence on Lou Lane in Wichita Falls.

Also in 2007, the FBI received a separate lead from the Wichita Falls Police Department (WFPD) regarding Baxter's involvement in selling pirated software. WFPD had previously dealt with Baxter selling infringing software in a 2004 investigation of him for credit card abuse. WFPD warned him that he could not sell pirated software on his websites. WFPD executed a search warrant at Baxter's residence in October 2007 and seized computers and external storage media.

The investigation revealed that Baxter owned and operated various websites, including Amerisoftware.com, Costfriendlysoftware.net, TechKappa.com, Ultrabackup.net, Superbuysoftware.net, and Go-E-Soft.com. These sites, which he advertised on line, offered "backup" copies of software, owned by Adobe, Microsoft and Autodesk Inc., for sale at about one-fifth of the manufacturer's retail value. Baxter also provided counterfeit product registration codes (serial numbers) that were distributed with the software so that the customer could install the software.

During the June 8, 2006, through April 9, 2007 time frame, Baxter caused more than 90 infringed copies of copyrighted software to be reproduced and distributed, for which he received more than $66,000. These included copies of Adobe's Photoshop CS2, Adobe Illustrator CS2 and Adobe Photoshop 7, all of which were copyrighted.

Baxter admits that he knew the "backup" copies of Adobe software were illegal reproductions and that he willfully infringed on their works for his personal financial gain. Baxter and the government agree that the government can prove an actual loss of between $400,000 and $1 million.

During the 2004 through 2007 time frame noted above, Baxter established at least 17 assumed business names with accompanying merchant bank accounts to process credit card payments for software orders. For example, during the brief time period of Aug. 7 through Aug. 18, 2006, Baxter received a total of $18,036 in his PayPal account. The records further show that these merchant bank accounts processed 3,089 approved software orders that totaled $384,380.

This case is being investigated by ICE HSI, WFPD and the FBI. Assistant U.S. Attorney Aisha Saleem, Northern District of Texas, is prosecuting.