Alibaba’s Anti-Counterfeit Efforts ‘Too Slow,’ Says U.S. Government

Jack Ma Alibaba
Alibaba Executive Chairman Jack Ma.
Getty Images.

It’s time for Alibaba Group Holding Ltd. to step up its efforts to combat the sale of knock-offs on its platforms, says the U.S. Trade Representative (USTR).

The USTR released its 2015 Out-of-Cycle Notorious Markets report Thursday, which highlights select online and physical marketplaces that reportedly engage in and facilitate counterfeit activity.

In the report, the USTR warned the China-based e-commerce giant — which was removed from the list in 2012 “in recognition of efforts to address rights holder and consumer complaints”— that its newest enforcement program “is too slow, difficult to use and lacks transparency.”

The Alibaba Group reported that it has added new enforcement features since the [release of the] 2014 list including a good-faith product takedown procedure, a three-and four-strikes penalty system. …” the USTR said in the report. “However, it is unclear what effect these procedures are having on the overall prevalence of counterfeit goods on the Alibaba plat­forms, particularly Taobao. Furthermore, submissions this year from trademark holders in several industries do not report improvement of the underlying problem.”

Despite acknowledging that there is potentially an ongoing problem, the USTR said it would not re-list Taobao or Alibaba at this time “but it encourages the company to enhance cooperation with all stakeholders to address ongoing complaints.”

After months of ongoing efforts to have the company re-listed, including submitting letters to the USTR and the Securities & Exchange Commission in April, the American Apparel & Footwear Association (AAFA) is applauding the U.S. government’s statements in the report.

The U.S. government sent a strong warning to Alibaba today ─ what it said was, ‘clean up your sites, show us the results, and do it soon,’” said Juanita Duggan, president and CEO of AAFA, in a statement. “USTR told Alibaba to make serious reforms and get rid of the rampant counterfeit problem on its sites ─ AAFA agrees.”

Given the size and the scale of Alibaba’s platforms, “stronger and more efficient systems for addressing right holders’ concerns should be undertaken without delay,” the USTR noted in the report.

“Such steps should include simplifying Taobao’s process­es for rights holders to register and request enforcement action; making Taobao’s good faith takedown procedures generally available; and reducing Taobao’s timelines for takedowns and issuing penalties for counterfeit sellers,” the USTR said.

Duggan said the AAFA had been frustrated with Alibaba’s efforts over the years and that a letter her organization sent to Alibaba Executive Chairman Jack Ma in July had gone unanswered.

“We hope Alibaba responds to this report and uses its position as one of the largest technology companies in the world to lead the way and eradicate counterfeits from its sites. We hope Alibaba chooses to become a market of integrity,” Duggan said.