Theft of Intellectual Property—Nathan Peterson

A California man has pleaded guilty in US District Court in Alexandria, Virginia to two counts of criminal copyright infringement.^[1] Beginning in 2003, software trade organizations—such as the Business Software Alliance—began investigating the 26 year-old Nathan Peterson after they received complaints about his site.^[2] His site offered pirated computer software at prices far below retail, such as an “Adobe product that provided different type fonts … for $79.95, as opposed to $8,999 in stores.”^[3] Software companies sent Mr. Peterson cease-and-desist letters, which he either ignored or rebuked.^[4]

He proved to be a shifty prosecution, as he migrated his servers from Texas to Los Angeles, causing investigators to lose “his trail a couple of times.”^[5] In the end, he caused nearly $20 million in losses, and “he spent much of his $5.4 million profit on homes, boats and cars, including a Lamborghini, a Mercedes and a restored 1949 Mercury Coupe purchased for his wife.”^[6] Mr. Peterson has agreed to pay $5.4 million in restitution to Symantec, Computer Associates, Yahoo!, and more than 15 other companies.

Criminal infringement of copyright is covered by 17 U.S.C. § 506 and by 18 U.S.C. § 2319.

Under 17 U.S.C. § 506, it is a crime for a person to willfully infringe a copyright either for purposes of commercial advantage or private financial gain, or by the reproduction or distribution, including electronically—during any 180-day period—of one or more copyrighted works with a total retail value of more than $1,000. Violating section 506 is punished by 18 U.S.C. § 2319.

If the violation is done for commercial advantage or private financial gain, the punishment is a fine, imprisonment for up to 5 years, or both, if the offense consists of at least 10 copies of at least 1 copyrighted work, having a total retail value of more than $2,500.^[7] If the offense was not done for financial gain, then punishment can be a fine, imprisonment from 1 to 6 years, or both.^[8]

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[1] Jerry Markon, Software Thief Admits to Crimes, Wash. Post, Dec. 14, 2005, at D1.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] 18 U.S.C. § 2319(b)(1).
[8] Id. § 2319(c).