A University of Oregon graduate who operated a computer software counterfeiting business for two years while a student was sentenced Monday to a year in prison and ordered to pay more than $100,000 in restitution to a California-based software company.
Jeffrey Alan Stockton, 21, of Honolulu, copied software, created fake serial numbers and printed labels and instruction manuals to make his stolen software appear to be the legitimate product, Assistant U.S. Attorney Sean Hoar said.Stockton’s employer discovered the illegal software use in late 1999 when an inventory of legitimate software turned up suspicious materials in Stockton’s work area, Hoar said.
Stockton’s supervisor phoned Eugene police.
Investigators made undercover purchases through the Internet and obtained a search warrant for Stockton’s residence. Pirated software, computer equipment and more than $13,000 in cash were confiscated.
Stockton, who received a degree in journalism from the UO in August, admitted the crime of copyright infringement, Hoar said. No other arrests are expected in the case. Investigators determined that Stockton’s counterfeit software scheme deprived Adobe Systems Inc. of at least $490,644 in retail sales.
“There may have been more,” Hoar said. “It really looked like the real deal when he mailed it to his customers.”
In negotiations with the San Jose-based company, Stockton agreed to pay Adobe $101,178 as part of his plea agreement, according to court records. He also forfeited computer equipment used in the counterfeiting.
Cynthia Navarro, manager of worldwide investigations and anti-piracy for Adobe Systems, said Stockton’s operation was notable for the amount of money he took in as a part-time counterfeiter. The amount of loss to the company was about average for such cases, she said.
Stockton’s scheme is one example of software copyright infringement that costs the industry an estimated $12 billion annually in sales worldwide, according to the most recent data from the Software Information Industry Association and the Business Software Alliance.
The thefts created 25,000 job losses and $400 million in lost tax revenue in 1999. In some cases, software pirating led to failure for start-up companies whose software was stolen and sold at a discount, the industry groups report.
The schemes can lead to trouble for buyers as well, Navarro said.
When Adobe Systems becomes aware of schemes like Stockton’s, the company usually sends letters to buyers of counterfeit software informing them of potential civil and criminal penalties. Adobe Systems will use Stockton’s business records to contact buyers of his counterfeit goods, she said.
Users can be sued for up to $150,000 in damages and lost profit for each counterfeit program used. Counterfeiters can be fined up to $250,000 and imprisoned for up to five years, according to the industry groups.
In most cases, consumers cooperate by turning in counterfeit copies. However, Adobe Systems takes civil action against unrepentant users of counterfeit copies of its software – especially business users. Navarro said the company is pursuing about 50 such legal cases.
She cautioned consumers against seeking bargain prices on software. At least 90 percent of software marketed on the Internet is counterfeit, she said, leaving buyers without a warranty, technical support or the ability to upgrade.
“If an online sales offer looks too good to be true, it definitely is if it’s software,” Navarro said.