Discount Reseller Fined $3.2M For Selling Counterfeit Symantec Software

Yet Papa B owner Richard Mastrogiovanni--who said he must pay $25,000 of the fine from his own pocket--noted that the monetary impact could have been worse. To avoid the possibility of a long, costly litigation, Mastrogiovanni said he decided to agree to a settlement with Symantec.

Though Mastrogiovanni maintains that Papa B didn't knowingly sell counterfeit Symantec products, the case illustrates how delicate the lines of communication can be sometimes between resellers and manufacturers.

Joy Cartun, senior director of legal affairs at Symantec, said the company thought Mastrogiovanni lagged in cooperating to resolve the issue. "We go out and find out what people are actually selling, and when we find [counterfeit Symantec] products, we contact them," Cartun said. "Some are cooperative immediately, and for the most part, we don't put those folks' feet to the fire. But in this particular case, my recollection is that to the extent that [Mastrogiovanni] was disclosing information, it was foot-dragging and incomplete."

The matter arose during the 2002 holiday shopping season, when Papa B sold discounted Symantec software through eBay auctions, a common practice. But then Mastrogiovanni said he got a call from Symantec. The security vendor alerted him that it had covertly posed as one of Papa B's eBay auction winners and, after inspecting the so-called Symantec software, determined that the product was counterfeit.

"[Symantec] said they purchased a CD and said it was counterfeit," Mastrogiovanni said. "I was surprised, but I cooperated. I thought we had a good relationship. They gave me the IFPI numbers to watch out for. And I agreed that if some copies got out the wrong way, it was wrong. So we gave them vendor names from where we order from, wholesale order numbers. We tried."

But throughout the effort to resolve the problem, Mastrogiovanni said Symantec kept the pressure on. Then, finally, Mastrogiovanni said he'd had enough. He had his lawyer draft a letter to Symantec requesting that they back off and leave Papa B alone. Yet Mastrogiovanni said he believed the legal riposte angered Symantec, "so they came after me with a vengeance."

Symantec followed the letter from Mastrogiovanni's lawyer by presenting added evidence that Papa B was selling bogus Symantec software--"a microscopic mark on the CDs that Symantec said could be used as proof the software was counterfeit," Mastrogiovanni said.

Faced with the new evidence, Mastrogiovanni said he felt he wouldn't be able to afford to defend himself against Symantec. "I'm a small company. I don't have the money to dispute something like this from a company the size of Symantec," he said.

Despite maintaining his innocence, Mastrogiovanni reluctantly accepted the terms of the settlement, which also require him "to provide assistance to Symantec in its investigative actions against other suppliers of counterfeit Symantec software," according to a Symantec statement.

In that statement, Cartun is quoted as saying "The size of this judgment is a reflection of the lack of cooperation Papa B Enterprises exhibited to resolve this case."

By Symantec's estimate, as much as $350 million of bootleg Symantec software is circulating in the marketplace. Cartun noted that Symantec's mandate in combating counterfeit software is to ultimately get to the initial bootleggers, and resellers suspected of selling counterfeit product should understand that cooperation is key.

"We recognize that small businesses can come across bad stock and that they may themselves have been victims," she said. "There are folks that convince us they were as much in the dark as anyone else, and we understand. We are after the folks who will lead us to those making the [counterfeit] stuff."