Alibaba: Fighting fakes with fire
The US has listed Alibaba’s Taobao marketplace on its notorious markets list for the first time in four years. Alibaba’s Matthew Bassiur discusses why these negative feelings might be misdirected

How do you respond to the accusations leveled against Taobao by the US Trade Representative?

This decision ignores the extensive, results-oriented work Alibaba Group is doing to protect intellectual property rights and assist law enforcement in bringing counterfeiters to justice. We are more effective in IP rights protection today than we were four years ago when the US Trade Representative (USTR) recognised our anti-counterfeiting efforts by removing the Taobao marketplace from its list. The more than 100,000 brands that operate on Alibaba’s marketplaces cannot all be wrong.

They are a clear demonstration of the trust that rights holders and consumers place in us.

Alibaba operates multiple ecommerce platforms—is this pressure from certain brands and the USTR a result of Alibaba’s size?

First and foremost, as the global leader in ecommerce, we have the responsibility to also be the global leader in anti-counterfeiting. Counterfeiting is a problem that companies of all sizes around the world encounter, both offline and online. We are the world’s largest online and mobile ecommerce company, with more than 10 million merchants and over one billion active product listings across our platforms at any given time. Our scale means that we must work harder and smarter than many other online marketplaces to protect IP.

As a company that operates principally in China, the manufacturing hub of the world, which unfortunately also includes criminals who produce and sell counterfeit goods, we are also uniquely situated and equipped with the data and technology necessary to crack down on counterfeiting at its source. Remember, Alibaba’s interests are aligned with the interests of brands and consumers. More than 100,000 brands operate on our marketplaces, including 75 percent of the world’s most valuable consumer brands, such as Apple, Disney, Ford, L’Oréal, Starbucks and Nike (according to Forbes list). Their trust in our platforms is paramount to our success.

We have a critical role to play in the fight against counterfeiting and we will continue to do so by promoting international collaboration, providing education, and developing and deploying advanced anti-counterfeiting technology.

In terms of your enforcement actions since Taobao was removed from the list four years ago, what are some of Alibaba’s key achievements, in your opinion?

Think about our anti-counterfeiting efforts in three buckets: (i) detection; (ii) immediate action; and (iii) getting to the root cause.

In January 2016, we established the global IP enforcement team—which I head up—to work with international brands and retail partners, industry associations, government regulators, law enforcement and other organisations, to advance Alibaba’s IP enforcement efforts.

Detection

Alibaba uses manpower and technology to continuously monitor our marketplaces for potentially infringing product listings. Our big data and advanced anti-counterfeiting technology, which can scan more than 10 million online product listings a day, enabled us last year to proactively close 180,000 virtual stores and take down 380 million infringing listings in 12 months—that’s 16 times the number of takedowns resulting from rights holders’ complaints. Our technology includes optical character recognition (OCR) and user identification technologies that help us block, screen and take down infringing listings.

Brands know their IP best, so the closer they work with us, the better we get at helping them protect their IP on our platforms, through improving our algorithms, or training our detection personnel. We routinely collaborate with brands, associations, regulators and law enforcement to maintain the integrity of our marketplaces. Brands that are a part of the founding members of our recently announced Big Data Anti-Counterfeiting Alliance include Louis Vuitton, Swarovski, Shiseido, Sony, Samsung, Western Digital, Canon, Ford, Bioderma, Amway, Mars, Pernod Ricard, and Huawei. We also have working relationships with the Business Software Alliance, the Motion Picture Association of America, and the Recording Industry Association of America, among others.

We are sharing information with brands through our IP Joint Force System, which alerts participating rights holders to suspicious listings that have been flagged by our platform-surveillance tools but the authenticity of which Alibaba is unable to verify independently. We plan to expand the IP Joint Force System portal this year to enable users to efficiently input IP-violation intelligence and information, which will enhance our anti-counterfeit capabilities. In addition, we continue to dedicate resources towards educating the industry about brand protection, including our IP protection information centre at www.ipp.alibabagroup.com.

Immediate action

These independent and collective Alibaba enforcement efforts are augmented by our online reporting systems, which we continue to upgrade. For example, we simplified the process for rights holders to register and request enforcement actions by consolidating our existing AliProtect and TaoProtect online reporting systems into a single portal. This has reduced the time needed to process takedowns and increased penalties for IP infringement.

To make it even easier and faster to get infringing listings taken down, Alibaba implemented the Good Faith Programme, which offers a simplified takedown process to rights holders that have a proven positive track record of submitting legitimate takedown requests. More than 1,100 brands, almost two-thirds of them international brands, have joined the Good Faith Programme since it was launched in 2015, and the roster is expanding rapidly.

To extend the programme’s benefits to more companies including small- and medium-sized entities, we are providing funding to the International AntiCounterfeiting Coalition’s (IACC) MarketSafe programme. Under this programme, the IACC works directly with rights holders to vet the legitimacy of their complaints. Our funding is allowing companies to participate in the MarketSafe programme for free for a period of time, in the expectation that they will become familiar enough with the takedown process to graduate to Alibaba’s Good Faith Programme.

Getting to the root cause

Our technological capabilities enable us to identify counterfeiting rings and generate solid evidence that we provide to law enforcement to assist them in the arrest and prosecution of offenders. In cooperation with authorities, we helped close down 675 counterfeit locations and put hundreds of criminals in jail in the past year alone.

Alibaba’s recent Operation Cloud Sword used big data to support Chinese authorities in raids that resulted in the seizure of RMB 1.43 billion ($208 million) in counterfeit goods that infringed the rights of 131 brands.

Alibaba is also deterring counterfeiters from using our platforms through civil lawsuits.

We recently sued two China-based makers of fake Swarovski watches, a strategy we hope will raise public awareness of the harm these bad actors cause while increasing the costs and risks of their illegal activities.

How important is IP enforcement to Alibaba?

This is a top priority for Alibaba. We cannot be a global leader in ecommerce without also being a leader in anti-counterfeiting. We believe that no other ecommerce company has dedicated more money, personnel and advanced technologies to the protection of brands and other IP than Alibaba.

Currently hundreds of employees at Alibaba are fully dedicated to our anti-counterfeiting work. We have invested millions into IP enforcement, such as the $15 million spent in 2015 alone on an ongoing test-buy programme to spot check that goods available through our platforms are genuine and meet quality standards.

With the input and feedback from brands, rights holders and customers, we’re constantly optimising our algorithms and upgrading our anti-counterfeiting technology in order to better automate the screening and takedown process.

Has Alibaba instilled confidence in brands whose rights are being infringed?

The growing support we receive from brands in implementing our anti-counterfeiting measures is an indication of the trust they have in us. For example, the number of brands who have joined our previously mentioned Good Faith Programme has more than doubled in the past year.

And as mentioned earlier, we just announced the launch of the Alibaba Big Data Anti-Counterfeiting Alliance, which already has more than 20 leading global brands as part of its founding members, including Louis Vuitton, Samsung, Sony, Mars, Shiseido, among others, and this alliance will continue to grow.

Alibaba’s anti-counterfeiting programmes have achieved tangible, measurable results, and that’s how we build trust with brands. It’s very encouraging to see that more and more brands are realising the importance of the whole industry, including online and offline marketplaces, working together in order for all of us to effectively fight against counterfeits.

What enforcement measures are you planning on implementing across Alibaba’s platforms this year to further reassure brands?

In addition to our new Big Data Anti-Counterfeiting Alliance, which will promote a global ecommerce ecosystem in which brands are protected from counterfeiters, this year the advancement of collaboration and enforcement mechanisms will be aided by Alibaba establishing a trade advisory board with trade associations and brands. We also intend to extend Operation Cloud Sword to include law enforcement in more Chinese provinces, forming what Alibaba is calling its Cloud Sword Alliance.

Ultimately, we will be further improving our big data capabilities to strengthen proactive screening, takedown activities and support offline law enforcement investigations.

We will be suing more counterfeiters we catch operating on our platforms. We will continue to dedicate resources to educating the industry and the public about brand protection.

Some rights owners are adamant that Alibaba’s efforts don’t go far enough. Where is the middle ground here?

We have invested an enormous amount of resources into enhancing our anti-counterfeiting activities and capabilities, our commitment to this effort is unwavering, and we are proud of our efforts.

There will always be critics, some of whom are driven by ulterior motives and their own business or political agendas, and not interested in achieving progress on this issue. Alibaba is interested in making ongoing progress on IP enforcement so constructive feedback from rights holders is always welcome. But as counterfeiters become increasingly global and high-tech themselves, combating them will require sustained investment and contributions from all, not from Alibaba alone.

By sharing expertise, pooling resources and working together—instead of pointing fingers and demanding more—stakeholders of all stripes, including online marketplace operators such as Alibaba, can develop the tools, the cutting-edge technologies, and industry best practices that can make a serious dent in this global problem.

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