Alibaba Holding Group Ltd. has to do a better job of fighting the sale of counterfeit goods and pirated materials on its e-commerce websites if it wishes to remain off the U.S. government’s annual "Notorious Markets List," according to a warning Thursday from the U.S. Office of the Trade Representative. While the federal agency stopped short of putting Alibaba on the registry, it issued a stern warning that the company’s efforts to fight piracy and respond to complaints would be monitored in the coming year for signs of improvement.
The Office of the U.S. Trade Representative unveiled its sixth list of such markets since the start of the Obama administration to shine a spotlight on some of the worst examples of intellectual property infringements in both online and physical marketplaces. It reported that online sales of counterfeit goods increased by about 15 percent in 2015 with retail, electronics, pharmaceuticals and luxury brands among the worst-hit sectors.
As for Alibaba, after being removed from the list in 2012, a new mention would damage the Chinese c-Commerce giant’s reputation in the U.S., where its shares trade on the New York Stock Exchange and where it’s cultivating business relationships with retailers and entertainment companies as part of the company’s global expansion. The trade representative is "increasingly concerned by rights holders’ reports that Alibaba Group’s enforcement program is too slow, difficult to use, and lacks transparency," according to the report. The office of the trade representative called for Alibaba to simplify the process for stakeholders to lodge complaints and request enforcement action, make procedures to remove counterfeit products readily available and reduce the timelines for removing counterfeit goods and levying fines against sellers.
Alibaba, which is currently embroiled in a bitter legal battle with luxury conglomerate, Kering, parent company to Gucci, Yves Saint Laurent, and Balenciaga, among others, in connection with the sale of counterfeit goods, “is committed to the protection of intellectual property rights and the fight against counterfeiting,” the company said in an e-mailed statement. “Counterfeiting is an issue all global e-commerce companies face, and we are doing all we can to address and fight it.”
Alibaba has been at odds with the American Apparel & Footwear Association, which has been lobbying to have Alibaba’s Taobao marketplace returned to the "notorious markets" lineup for failing to stop the sale of fakes.
“We feel very validated and vindicated today,” said Juanita Duggan, president and CEO of the trade group, in an interview. “It’s complete validation and it tells us that we should continue to fight the good fight until we have some results.”