Alibaba Taobao

WASHINGTON — The American Apparel & Footwear Association is redoubling its efforts for stepped-up U.S. government scrutiny of counterfeits on Alibaba’s online marketplace Taobao, calling for the e-commerce platform to be re-listed on a government watch list.

This story first appeared in the October 6, 2015 issue of WWD. Subscribe Today.

It is the latest move by AAFA to pressure Alibaba to engage in more substantive discussions that the trade association hopes will lead to an agreement on a permanent counterfeit takedown system on Taobao, and an easier and quicker process for U.S. brands and retailers.

AAFA submitted public comments to the U.S. Trade Representative’s office on Monday, as part of the government’s request for information for the 2015 “Notorious Markets” list that identifies online and physical marketplaces said to be hubs for counterfeits and digital piracy. The association’s main push is to have USTR re-list Taobao on the government’s watch list.

“We are filing these comments today because we are taking on counterfeits and we are going to take on counterfeits everywhere we find them,” Juanita Duggan, president and chief executive officer at the AAFA, said. “Taobao is synonymous with counterfeits. We think it is important that we go on record with the USTR asking that they be re-listed. We also have 100 markets that we have identified — 13 of them are online and 87 are physical markets — but Taobao is by far the most important because it’s the largest and it’s growing. It sets the standard for counterfeit products. That’s why we are doing this.”

USTR removed Taobao from its “Notorious Markets” list in 2012 and declined to re-list the site in its 2013 and 2014 reports that are aimed at prodding foreign governments to address intellectual property allegations raised, intensify efforts to combat piracy and counterfeiting and to pursue legal actions where warranted.

In the April report, USTR cited several steps Alibaba and the Chinese government have taken to address the concerns of industry and declined to re-list the online market to the list. However, trade officials said at the time and in comments in later forums that they are growing concerned about the recent allegations of counterfeiting and digital piracy on Alibaba’s consumer-to-consumer platform.

A USTR spokeswoman addressed the issue in an e-mail to WWD in response to a question about whether U.S. officials planned to raise the issue of Taobao with Chinese President Xi Jinping during his state visit here last month.

“The United States and China continue to address counterfeiting concerns within larger discussions on IP protection and enforcement,” she said. “In the 2014 Notorious Markets List, USTR noted the commitments and assurances made by Taobao to address the concerns raised by rights holders and consumers, including in the software, publishing, apparel and footwear industries, and cited Taobao’s reported actions to remove ‘millions of listings for counterfeit and pirated products manufactured in China.’

“We also noted our concerns that despite these actions, Taobao remains the target of significant enforcement actions within China and encouraged Taobao to continue working with all stakeholders to address ongoing complaints. On Sept. 10, USTR issued a Federal Register notice welcoming public submissions on the 2015 Notorious Markets List.  These submissions will help form the basis for our determinations to list any potential markets in this year’s report.”

Duggan said when USTR de-listed Taobao in 2012, it was under the condition that they “continue to make progress on taking down counterfeits.”

“In our view that condition has not been met,” she said. “We are also doing this because we’ve had four years of completely unproductive conversations [with Alibaba officials]. There has been no response [from them] to work with us more closely.”

The relationship between AAFA and Alibaba became particularly strained in April when AAFA lodged two formal complaints with the U.S. government, charging that the counterfeit problem on Alibaba’s online platforms was worsening and costing brands millions of dollars in lost sales a year.

In July, Duggan sent a letter to Alibaba executive chairman Jack Ma outlining her members’ concerns about counterfeits on Alibaba’s online platforms and charging that there have been no verifiable results. She said in the letter that AAFA’s members are asking Alibaba to address counterfeit concerns more quickly and in a more transparent manner. The association, which represents more than 340 companies and 1,000 brands, also asked Alibaba to create a process where the company removes counterfeits quickly at the request of certified brands.

Alibaba publicly defended its measures in April, outlining several steps it has taken to prevent counterfeiting and pirated goods from being offered or sold on its marketplaces. The measures include the use of data-mining technology to analyze and track transactions of infringing products and identifying “hot spots” of counterfeit distribution and sales and collaborating with Chinese public security, copyright, quality inspection and intellectual property agencies to take down online counterfeiters.

“Unfortunately, de-listing Taobao in 2012 did not lead to sustained improvements to the counterfeit problem,” Duggan said in the submission to USTR. “In fact, it has gotten worse. Increased pressure is needed to fix this problem. Otherwise, counterfeits will only continue to proliferate worldwide as Alibaba continues to expand.”