Washington DC
12 January 2018
Reporter: Barney Dixon

USTR targets Taobao in Notorious Markets review

US Trade Representative Robert Lighthizer has revealed the findings of his office’s 2017 Special 301 Out-of-Cycle Review of Notorious Markets, highlighting 25 online markets and 18 physical markets, including Alibaba’s Taobao ecommerce platform.

According to a statement from the office of Lighthizer, the activity of these markets “harms the American economy by undermining the innovation and intellectual property rights of US owners of IP rights in foreign markets”.

“Imports in counterfeit and pirated physical products is estimated at nearly half a trillion dollars, or around 2.5 percent of global imports,” it said.

Lighthizer commented: “Marketplaces worldwide that contribute to illicit trade cause severe harm to the American economy, innovation, and workers.”

“The Trump Administration is committed to holding intellectual property rights violators accountable and intensifying efforts to combat counterfeiting and piracy.”

Of Taobao, the report said that the website offered “a high volume of infringing products” and stakeholders “continue to report challenges and burdens associated with IP enforcement on the platform”.

The report recognised Alibaba’s efforts to curb the sale of infringing products on Taobao, but said that the “prevalence of infringing listings and sales continues to be a challenge and there are additional steps Alibaba must take to address ongoing concerns”.

According to the report, Alibaba should “seriously consider expanding its reported ban on automotive air bags and air bag components on the Alibaba.com and AliExpress.com platforms to the Taobao platform”.

It also recommended that Alibaba ensure its referrals of criminal leads to Chinese authorities lead to meaningful enforcement outcomes, and seek to improve the effectiveness of its repeat infringer policy.

An Alibaba spokesperson said that the company had been “turned into a scapegoat by the US Trade Representative to win points in a highly-politicised environment and their actions should be recognised for what they are”.

“The US Trade Representative’s actions made it clear that the Notorious Markets List, which only targets non-US marketplaces, is not about intellectual property protection, but just another instrument to achieve the US Government’s geopolitical objectives.”

The spokesperson concluded: “Alibaba reiterates our point of view: we will continue to strengthen our IP protection system with world leading technology and a collaborative approach with brands and other stakeholders. Our efforts and results speak for themselves: over 100,000 brands, including 75 percent of the world’s most valuable consumer brands, do business on our platform.”

Last year, Alibaba was involved in a series of enhanced enforcement efforts that targeted IP infringers, including the launch of its Big Data Anti-Counterfeiting Alliance and the success of its Operation Cloud Sword.

In cooperation with Chinese law enforcement, Cloud Sword resulted in the end of 417 counterfeit production rackets.

Taobao was returned to the Notorious Markets list in 2016 after a four year absence, which the US Trade Representative said was down to “unacceptably high” levels of reported counterfeits and piracy.

But according to an end of year report from Alizila, Alibaba’s corporate news website, its IP protection programme improvements have resulted in 28 times more listings proactively take down than removed reactively between September 2016 and August 2017.

Alizila said that 98 percent of those proactive takedowns resulted in removals before a single sale was made.

Alibaba also shut down more than 230,000 bad merchants across its platforms during this period, and provided 1,573 leads to police, with more than 1,000 arrests made as a result, according to the Alizila report.

An Alibaba spokesperson added that the company has addressed all three of the US Trade Representative's 2016 recommendations for the Taobao platform, including the creation of simplified processes for rightsholders to register and request enforcement action, the availability of good faith takedown procedures, reduced timelines for takedowns and issuing penalties for counterfeit sellers.

Prolific piracy site The Pirate Bay also continued its streak on to the list, despite enforcement actions around the world and legal battles against its operators.

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

“The site is in the top 100 most popular sites worldwide, is available in 35 languages and celebrated its 10-year anniversary by releasing the PirateBrowser, a portable web browser with preset bookmarks to BitTorrent websites”

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USTR targets Taobao in Notorious Markets review
12 January 2018 | Washington DC | Reporter: Barney Dixon
US Trade Representative Robert Lighthizer has revealed the findings of his office’s 2017 Special 301 Out-of-Cycle Review of Notorious Markets, including accusations against Alibaba’s Taobao ecommerce platform