North Texas man sentenced to nearly 5 years in federal prison on copyright infringement conviction

WICHITA FALLS, Texas — A local man was sentenced on Tuesday to nearly five years in federal prison, and ordered to pay $402,417 in restitution, following his June 2011 guilty plea on copyright infringement, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

U.S. District Judge Reed C. O'Connor sentenced James Clayton Baxter, 28, of Wichita Falls, Texas, to 57 months in prison. Baxter must surrender to the Bureau of Prisons by March 29.

"Homeland Security Investigations is one of the primary enforcers of intellectual property rights laws," said David M. Marwell, special agent in charge of HSI Dallas. "This sentence is part of the ongoing message to potential counterfeiters that there are serious consequences for copyright infringement." Marwell oversees 128 counties in north Texas and the state of Oklahoma.

According to documents filed in the case, from June 8, 2006 through April 9, 2007, Baxter infringed upon the copyrighted works of Adobe Systems Inc. by reproducing copies of its computer 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 computer software from TechKappa.com, a website that sold copies of software titles via download from the Internet. The investigation led 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 encountered Baxter selling infringing software in 2004 while investigating him for credit card abuse; he was warned 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 online, 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.

Between June 8, 2006, through April 9, 2007, 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 the following copyrighted computer software: Adobe's Photoshop CS2, Adobe Illustrator CS2 and Adobe Photoshop 7.

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.

Between 2004 and 2007, 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 between Aug. 7 and Aug. 18, 2006, Baxter received $18,036 in his PayPal account. Records further show that these merchant bank accounts processed 3,089 approved software orders that totaled $384,380.

The conviction and sentencing of James Clayton Baxter is the latest in a series of investigations initiated by the National IPR Coordination Center involving defendants from Wichita Falls, Texas. Six other men have also been convicted of operating websites used to sell pirated Adobe software:

• Thomas C. Rushing III, William Lance Partridge and Brian C. Rue all pleaded guilty to criminal copyright infringement in U.S. District Court in Austin, Texas, on Aug. 22, 2008.
• Timothy K. Dunaway pleaded guilty to criminal copyright infringement in U.S. District Court in Wichita Falls, Texas, on Oct. 20, 2008.
• Robert and Todd Cook pleaded guilty to criminal copyright infringement in Alexandria, Va., on March 11, 2010.

Sentences for the seven defendants ranged from 12 months and a day to 57 months imprisonment with restitution totaling more than $2 million ordered to be paid to Adobe Systems Inc., a U.S. corporation based in San Jose, Calif. Combined, the counterfeit Adobe software sold by these individuals had a retail value of more than $15 million.

This case was investigated by HSI, the Wichita Falls Police Department and the FBI.

Assistant U.S. Attorney Aisha Saleem, Northern District of Texas, prosecuted this case.