USTR Urges Alibaba to Step up Anti-Counterfeiting Efforts

USTR Urges Alibaba to Step up Anti-Counterfeiting Efforts

While falling short of listing Alibaba or any of its affiliates to its 2015 list of notorious counterfeit markets, the U.S. Trade Representative’s Office (USTR) warned the Chinese e-commerce giant to address reports that its not moving fast enough to remove counterfeit products from its online market places.

“USTR is increasingly concerned by rights holders’ reports that Alibaba Group’s enforcement program is too slow, difficult to use, and lacks transparency,” reads the “2015 Out-of-Cycle Notorious Markets Review,” which identifies physical and online marketplaces that sell or facilitate the sale of counterfeits. “During the 2015 review, commenters that rely on trademark protection widely criticized TAOBAO.COM, ALIBABA.COM, and other Chinese e-commerce websites under the Alibaba Group, including TMALL.COM, a business-to-consumer platform, and 1688.COM, a wholesale marketplace.

Brand owners continue to report that Alibaba platforms, particularly Taobao, are used to sell large quantities of counterfeit goods.”

While USTR opted not to re-list Taobao or Alibaba to the Notorious Markets list “at this time,” it urged the company to respond to intellectual property rights holders’ concerns without delay by:

simplifying Taobao’s processes for rights holders to register and request enforcement action,
making Taobao’s good faith takedown procedures generally available, and
reducing Taobao’s timelines for takedowns and issuing penalties for counterfeit sellers.

The USTR report does list as a Notorious Market. “While this Indonesian site is a platform for legitimate sales, apparel and footwear companies report challenges with counterfeit sellers and a lack of effective procedures for reporting and removing counterfeit listings on this quickly growing e-commerce platform,” reads the report.

The American Apparel & Footwear Association applauded the report.

“The U.S. government sent a strong warning to Alibaba today ─ what it said was, clean up your sites, show us the results, and do it soon,” said Juanita Duggan, president and CEO of AAFA. “USTR told Alibaba to make serious reforms and get rid of the rampant counterfeit problem on its sites ─ AAFA agrees.”

Today’s report included the most extensive criticism and the most specific concerns about Alibaba ever cited, AAFA officials said. Alibaba received more attention than any other market. In particular, USTR criticized Alibaba’s enforcement system noting it is “too slow, difficult to use, and lacks transparency.”

“AAFA strongly complained about the volume of counterfeits on the Alibaba sites and has repeatedly called for Alibaba to come up with a new system to take down counterfeits. It’s clear in this report that USTR shares these concerns.” Duggan said.

Despite years of discussion with Alibaba to try to fix the problem, AAFA saw no results. This year, AAFA raised its concerns with U.S. regulators, including USTR and the Securities and Exchange Commission, which regulates publicly traded companies in the U.S., like Alibaba.

“After years of trying to work with Alibaba, we got nowhere. Every signal we received was that they were unwilling or unable to make reforms,” Duggan said. “In July, we called on Alibaba Executive Chairman Jack Ma to work with us to develop new, transparent, and easy-to-use takedown procedures, but received no response.”

Duggan added, “We hope Alibaba responds to this report and uses its position as one of the largest technology companies in the world to lead the way and eradicate counterfeits from its sites. We hope Alibaba chooses to become a market of integrity.”

AAFA represents apparel and footwear brands, an industry whose products include clothing, shoes, handbags, and accessories. Knockoffs of these products cost brand owners millions of dollars and damage to brand reputation. Fashion products are the number one seized items for counterfeits by the U.S. Customs and Border Protection agency.

Each year, AAFA submits comments to the Notorious Markets process. Its 2015 submission identified 101 physical and online markets, the largest submission to-date. The record number of identified markets underscores the growing worldwide problem of counterfeits.

“The Notorious Markets report shines a light on the seriousness of the counterfeit problem worldwide,” Duggan said. “We appreciate USTR’s thoughtful review and its acknowledgment of our concerns.”