Alibaba Group, the Chinese e-commerce giant and notorious facilitator of the rampant sale of counterfeit goods on its platforms, is making waves as the newest member of the International AntiCounterfeiting Coalition (“IACC”). As a result, Michael Kors (which, like Alibaba, had an immensely successful initial public offering in recent years) has responded to the Chinese company’s inclusion by quitting the IACC, a non-profit organization devoted solely to combating product counterfeiting and piracy.
According to the IACC, “what began with a handful of companies seeking intellectual property protection has grown to a membership base of over 250 in the past three decades. The IACC is a member-driven organization that is comprised of a cross-section of business and industry - from automotive, apparel, luxury goods and pharmaceuticals, to food, software and entertainment. The IACC's membership also includes law firms, investigative and product security firms, government agencies and intellectual property associations who are committed to fighting counterfeiting and piracy.”
As of this past week, the IACC has one less member: Michael Kors, and the New York-based fashion giant is not alone. Paris-based accessories brand, Longchamp, is also openly unhappy with Alibaba’s membership status, in addition to rising reluctance among some of the IACC 250+ other members. Barbara Kolsun, former general counsel for Stuart Weitzman, who served as the Chairman of the Board of the IACC for a number of years, told the Wall Street Journal this past week: “Roughly two dozen brands and other IACC members have privately expressed support in emails and phone calls for Michael Kors’ position but are reluctant to be named because they are working with Alibaba on removing counterfeits.”
The French intellectual property protection group Unifab has also expressed doubts about IACC's decision to admit Alibaba, though the group did invite Jack Ma to speak at a conference in February. Alibaba ended up sending Matthew Bassiur, head of global intellectual property enforcement, instead. Unifab's director general, Delphine Sarfati-Sobreira, said her members were still waiting for "convincing results further to the promises made by Alibaba."
Alibaba, which hosts platforms, such as TaoBao and Tmall, is a problematic member, as membership status is reserved for companies that “are not directly or substantially impacted by counterfeiting, but whose industry position or policies make them a potential partner with the IACC in its mission to combat counterfeiting and piracy.” However, its membership does not come without strings attached. According to a letter to IACC members from its board, Alibaba falls under a special category of membership, which is subject to annual review and is barred from holding leadership roles or voting.
As for Kors, the brand's longtime general counsel, Lee Sporn, recently penned a letter the IACC (which was obtained by the WSJ) alleging that Alibaba is one of the fashion industry’s “most dangerous and damaging adversary.” The letter goes on to state: “Alibaba’s strategy has consistently been to provide lip service to supporting brand enforcement efforts while doing as little as possible to impede the massive flow of counterfeit merchandise on its platforms. By admitting Alibaba as a member and applauding Mr. Ma's appearance at the Spring Conference, you give Mr. Ma a powerful tool to speak to brand owners and regulators about his efforts to work collaboratively and effectively with brand owners — in the experience of many of your members a shockingly brazen lie."
The move comes on the heels of Alibaba’s appointment of Matthew Bassiur as the head of global intellectual property enforcement to oversee the company's anti-counterfeiting and intellectual property rights protection efforts. Bassiur joined Alibaba in January 2016 from Apple, where he served as the senior director of the Americas region and counsel for intellectual property rights enforcement.
Speaking of Bassiur’s appointment in late 2015, Alibaba Group Executive Chairman Jack 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.).
As a member of the IACC, Ma will have a chance to address brands and IP experts who are unsettled by Alibaba’s lack of action to utilize “proactive” measures to crack down on counterfeit goods.