Washington DC
22 December 2016
Reporter: Mark Dugdale
Alibaba slams return to notorious markets list
The US Trade Representative’s (USTR) decision to return the Taobao marketplace to the Special 301 Out-of-Cycle Review of Notorious Markets “ignores the real work” that its parent, Alibaba Group, has done against counterfeiters.

Alibaba president Michael Evans blasted the inclusion of Taobao in the latest review, which was released yesterday (21 December), calling it “unreasonable for the USTR to have concluded that Alibaba is less effective in anti-counterfeiting than when it reviewed our efforts in 2015 and when it removed us from its list four years ago”.

The Chinese ecommerce group has attracted increasing criticism over the past two years, with China’s State Administration for Industry and Commerce conducting a test on Taobao in early 2015 that found that 67 percent of the goods purchased on the marketplace were counterfeit.

Earlier in 2016, Alibaba faced a fierce backlash from brands when it joined the International AntiCounterfeiting Coalition. Its membership was subsequently suspended.

In a letter to the USTR calling for Taobao to be returned to the notorious markets list, the American Apparel & Footwear Association said: “Counterfeits remain rampant on Taobao and are regularly found on other Alibaba sites.”

“Any review of Taobao on a daily basis will find listings for dozens of AAFA member brands at absurdly low price—a strong indication that such merchandise is counterfeit.”

These criticisms have been levelled at Alibaba despite the ecommerce group ramping up its protection efforts through industry partnerships and a strong in-house system.

In the latest Special 301 Out-of-Cycle Review of Notorious Markets, the USTR was adamant that these steps didn’t go far enough.

The USTR said: “While recent steps set positive expectations for the future, current levels of reported counterfeiting and piracy are unacceptably high.”

“Not only do counterfeit and pirated goods pose a grave economic threat to US creative and innovative industries, undermining the Chinese and global market for legitimate US products, substandard counterfeits such as auto parts pose a potential public health threat to unsuspecting consumers.”

“One large motor vehicle manufacturer reported that at least 95 percent of the merchandise bearing its company’s brand names and trademarks found on Alibaba platforms is suspected to be counterfeit.”

The USTR called on Alibaba to intensify its enforcement efforts and said it will closely monitor advances made next year, including its promise to implement a three-strike policy for repeat infringers from January 2017, which will expedite the closure of [their] accounts”.

In response, Alibaba president Evans said: “We are very disappointed by the USTR’s decision to include Taobao on its notorious markets list, which ignores the real work Alibaba has done against counterfeiters. In 2016 alone, we proactively removed more than double the number of infringing product listings than in 2015.”

“Our results speak for themselves. Unfortunately, the USTR’s decision leads us to question whether the USTR acted based on the actual facts or was influenced by the current political climate. Nevertheless, the decision sends the wrong message and is inconsistent with the effective collaborative approach we have taken with brands and governments around the world in our fight against counterfeiting.”

The notorious markets list, an annual naming and shaming of online and physical ‘marketplaces’ that wantonly abuse the intellectual property of US rights holders, listed 20 other websites, including The Pirate Bay, “after an unfortunately brief hiatus”.

“The Pirate Bay is of symbolic importance as one of the longest-running and most vocal torrent sites for admittedly illegal downloads of movies, television, music, and other copyrighted content,” the USTR said.

Its operators have resorted to innovative means to evade takedown, employing its own browser to circumvent court-ordered enforcement in more than 10 countries, as well as using more than a dozen domains hosted in various countries around the world, applying a reverse proxy service, and using a hosting provider in Vietnam.

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