Alibaba at Center of Yet Another Counterfeiting Controversy

The latest round of complaints from brands regarding Alibaba’s lack of progress in its battle to stamp out trafficking in pirated goods in its online marketplaces, includes a call for the U.S. Trade Representative (“USTR”) to re-include it in its upcoming edition of its Notorious Markets for piracy list. In response, the Chinese e-commerce giant said it has tightened policies to deal with intellectual property infringement and made it easier for brands to issue complaints and request removals of counterfeit goods on its platforms.

Earlier this month, the American Apparel & Footwear Association ("AAFA") formally petitioned the USTR to reinstate Alibaba and its constituent platforms on the American Government’s Notorious Markets list, a designation applied to websites and markets where there is large-scale intellectual property rights infringement. While it has firmly held a place on Notorious Markets list in the past, Alibaba was removed from the list in 2012.

Alibaba, China’s largest e-commerce company, responded to the AAFA petition with a USTR submission of its own. “At Alibaba, counterfeit goods are absolutely unacceptable,” Alibaba said in its letter to the trade representative. "We do not tolerate or condone those who steal other people’s intellectual property." Moreover, Alibaba claims that it has taken down 380 million counterfeit product listings and closed about 180,000 stores on its Taobao marketplace that were offering counterfeit goods. in the 12 months leading up to August 2016.

Alibaba landed at the center of a similar scandal nearly two years ago, when one of China’s main commerce regulators criticized the company after a survey found that nearly two-thirds of goods traded on Taobao were counterfeits. Alibaba promised to more aggressively police its sites, and yet, many believe the Chinese giant headed up by Executive Chairman Jack Ma is all talk and little meaningful action.

This time around, Alibaba promised to become more stringent on repeat infringers, expediting the closure of accounts that accumulate three infractions. The company claims it has already begun prohibiting listings that intentionally blur trademarks in product photos. It further highlighted its appointment of former Apple counsel Matthew Bassiur as vice president of its global intellectual property department in a move to strengthen its copyright protection team.

Speaking of Bassiur’s appointment in late 2015, Ma stated: “Matthew’s appointment is the latest step in Alibaba Group’s comprehensive and industry-leading efforts to fight counterfeits. Counterfeiting is a problem that challenges all forms of distribution, whether in e-commerce or offline retail. We will continue to be relentless in our long-term commitment to protect both consumers and intellectual property rights owners, and we call on all companies in our industry to join our fight against bad actors.”

Hardly a stranger to counterfeit complaints, Alibaba has been sued twice in the recent past by Kering for selling counterfeit Gucci, YSL, and Bottega Veneta goods. It has also been targeted by LVMH for offering counterfeit goods bearing its brands’ trademarks (think: Louis Vuitton, Celine, Givenchy, and Dior, etc.).

Most recently, the Chinese giant caused controversy earlier this year when it was granted inclusion in the International AntiCounterfeiting Coalition, a non-profit organization devoted solely to combating product counterfeiting and piracy. In response to its membership, a number of existing members, such as Gucci, Tiffany & Co., and Michael Kors, withdrew from the organization, and board members received an anonymous email threatening a mass defection unless Alibaba was pushed out; within a week of the Chinese company’s inclusion, its membership was suspended by the group.