Johnson & Pham is an aggressive law firm that does actually sue people. I've represented many clients in more or less the same boat as you with Paul Pham etc., and each time they send a demand letter, they've also sent a prospective defendant a printout from PACER showing their lawsuits on behalf of their client they've filed to prove their letter isn't a scam and they're actually litigating lawyers.
They sue in federal court in the Central District of CA which is convenient for them since they're in LA, and their investigator is there too, to give them jurisdiction for the alleged claim.
I've also seen lawsuits they file when their demand letters are ignored, so yes, you do need a local lawyer to represent you.
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Yes you need an attorney. When you burned this DVD with the instructions you provided, you violated copyright law. This is not even a close question. You need to retain counsel to negotiate a settlement with Johnson & Pham, was is a very reputable firm which regularly handles these cases.
As noted by Attorney Ross, it's unlawful to copy software -- even if the software is a demonstration version freely distributed by its creator -- and it's unlawful to sell the copy. I would be surprised, however, if the reason you were contacted was simply due to that one copy that you sold along with your computer. The damages to Adobe is so slight that no reasonable attorney would pursue the matter. And, though they may, I don't think that Johnson & Pham represents Adobe. So, yes, you need to have your own copyright attorney review the letter and consider the matter more thoroughly. Good luck.
The above is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. I am not your attorney. You should seek the advice of competent counsel before taking any action related to your inquiry.
You have been caught. You sold an infringing copy to an investigator for a continent fee litigation firm. My guess is this is not the first time you did this. You are in trouble and likely for more than you think. Just one infringing copy could cost you up to $150,000 plus attorney fees. Can't pay, then a judgment and likely bankruptcy might hound you for years. It's a fair penalty for stealing IP.
I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.
You absolutely need a local attorney to represent you. Hopefully, you can settle for an amount low enough that it doesn't drive you to bankruptcy; this is clearly an example of what is called "willful infringement." By making a copy of the demo and sending it along with instructions and the necessary file in order to convert that demo into an illegal full copy of the program, you both infringed the copyright in Photoshop by circumventing its digital protections and induced another party to infringe the copyright in that program.
The level of illegality here is staggering, and you should be prepared, as other responding attorneys have indicated, for the copyright owner to demand up to $150,000 for each program you have infringed in this manner. If you go to court on these facts, you'll end up paying up to $150k plus their attorney fees - which will likely be substantial.
No information you obtain from this answer is legal advice, nor is it intended to be. You should consult an attorney for individualized advice regarding your situation. No attorney-client relationship is formed by my responding to your question.