Alibaba

After pressure from a broad coalition of business groups, the U.S. Trade Representative’s Office has relisted Alibaba‘s Taobao e-commerce site on its “Notorious Markets” list for 2016, four years after removing it.

The American Apparel & Footwear Association and 17 other organizations filed a complaint in October with USTR over counterfeits sold on Alibaba’s online platforms, urging the agency to step up its scrutiny of the Chinese e-commerce giant and relist it on the counterfeit watch list.

The USTR report said, “The Taobao.com e-commerce platform is an important concern due to the large volume of allegedly counterfeit and pirated goods available and the challenges right holders expe­rience in removing and preventing illicit sales and offers of such goods.”

Right holders in the U.S. and internationally have continued to report serious challenges to reducing high levels of counterfeit and pirated goods on Taobao, said the report, and “long-standing obstacles to understand­ing and utilizing basic IP enforcement procedures continue unabated.”

Rick Helfenbein, president and chief executive officer of the AAFA, said, “Today’s action shines a renewed spotlight on the considerable concerns we and others continue to see on Alibaba platforms. In the coming year, we will work with our members, USTR and other government agencies, outside stakeholders and Alibaba itself to seek sustained improvements that lead to the permanent removal of counterfeits from these online platforms.”

Noting that Alibaba has made efforts to improve its intellectual property rights enforcement, its so-called “Good Faith Program” reportedly remains out of reach for the majority of right holders, due to stringent eligibility criteria that must be met and maintained over a period of time.

“There is a reported significant disparity be­tween the timeliness and effectiveness of Alibaba’s responses to complaints submitted by right holders in the Good Faith Program and those outside the program,” USTR’s report said. “While recent steps set positive expectations for the future, current levels of report­ed counterfeiting and piracy are unacceptably high.”

Michael Evans, president of Alibaba Group, said, “We are very disappointed by the USTR’s decision to include Taobao on its Notorious Markets list, as we are far more effective and advanced in IPR protection than when the USTR took us off the list four years ago. The decision ignores the real work Alibaba has done to protect IP rights holders and assist law enforcement to bring counterfeiters to justice.”

USTR Michael Froman, in unveiling the report on Wednesday, said, “Tens of millions of American jobs and several trillion dollars of our gross domestic product rely on American creative and innovative industries. The marketplaces, tactics and schemes that undermine and threaten America’s creative industries change quickly and require our constant attention.”

The report notes that during the past year, some previously listed online markets have been subject to successful enforcement efforts or are reported to have undertaken various measures that demonstrated a willingness to cooperate in addressing infringement. Alibaba claims, for example, that it has proactively removed more than 380 million product listings and closed about 180,000 Taobao stores in the 12 months through August.

“In 2017, the U.S. will closely monitor the implementation and effectiveness of the set of prospective actions described in Alibaba’s Notorious Markets List submission,” the report said. “As Alibaba moves forward with its plans to further reform and enhance its enforcement tools across platforms, the recommen­dations highlighted in the 2015 list remain valid, namely simplifying processes for right holders to register and request enforcement action, making good faith takedown procedures generally available, and reducing Taobao’s timelines for takedowns and issuing penalties for counterfeit sellers.”

While many of the companies cited in the report are involved in illegal piracy of media such as movies and games, as well as digital copyright infringement, Alibaba is not alone in the fashion realm being targeted on USTR’s naughty list.

The business-to-business e-commerce platform GongChang is reportedly one of several online markets in China that are well-known for the sale of counterfeits, including counterfeit security tags that retailers affix to products as part of a shoplifting prevention system.

Muaban is one of several Vietnamese e-commerce platforms nominated this year. Al­though this Vietnam-based online marketplace facilitates sales of legitimate goods, stakeholders have identified this site, which has over 3 million page views each month, as one that also offers counterfeit apparel and footwear. Muaban does not appear to have an effective mechanism to remove counterfeit listings.

China is reportedly the global hub for manufacturing counterfeits, with Guangdong Prov­ince at its epicenter, USTR said. At the Baiyun Leather Goods Market, ven­dors reportedly sell a wide range of counterfeit leather goods. Also in Guangzhou, shops in the Jin Long Pan Foreign Trade Garment Market allegedly sell low-quality, relatively inexpensive counterfeit ver­sions of U.S. and other branded apparel and footwear on a wholesale scale for export to Africa and the Middle East.

Many retail vendors at the Silk Market reportedly distribute counterfeit consumer prod­ucts. Despite posted signage indicating that the Silk Market should be a model of IPR enforcement, multiple vendors reportedly sell counterfeit goods at a small fraction of the price of authentic articles, and openly assert that the fakes are of high quality. Such conditions are reported to persist despite welcomed efforts by Chinese authorities to work with management and engage in enforcement actions, and even though some right holders have successfully sued the market’s operators.

In Hanoi, the Nihn Hiep retail market has been the target of raids and seizures of counterfeit goods and labels. USTR said it urg­es the government of Vietnam to continue to take enforcement actions to deter sales of counterfeit goods and labels at this and other nominated markets in Vietnam.

Numerous markets in India have appeared in past Lists, with no effective response by the Indian government. In the 2016 Notorious Markets process, stakeholders highlighted dozens of markets across India for counterfeit apparel, footwear, automobiles and auto parts, electronics, leather goods, mobile phones, CDs and DVDs, and luxury goods. Gandhi Nagar is highlighted for counterfeit apparel, while Burma Bazaar is highlighted for a wide variety of counterfeit goods and pirated media discs.