[Updated] Alibaba Responds to the AAFA’s Counterfeiting Complaints

In response to the American Apparel & Footwear Association’s accusations of inadequate efforts to combat the sale of counterfeit goods on its Taobao platform, an Alibaba Group spokesperson told FN that the company is dedicated to the fight against counterfeits because the health and integrity of its business depends on it.

Alibaba’s spokesperson said it has been working with the AAFA since 2012 to “discuss how Alibaba can collaborate with the association and its members to address sales of counterfeit goods online,” and as such, “we are committed to continuing our dialogue with AAFA.”

Last week, AAFA President and CEO Juanita Duggan filed a complaint with Securities & Exchange Commission Chairwoman Mary Jo White and another with U.S. Trade Representative Michael Froman, asking for assistance in stopping what she described as “the rampant proliferation of counterfeit apparel and footwear on the Taobao platform of Alibaba.”

“Alibaba’s Taobao platform is notorious as one of the biggest platforms for counterfeit goods worldwide,” said Duggan in the complaints. “Our members encounter innumerable counterfeits on TaoBao every day, which result in millions of dollars of lost sales, damage to reputation, legal costs, and exhaustion of internal resources.”

In an email to FN, Alibaba outlined a broad range of measures the company says it uses to prevent counterfeit and pirated goods from being offered and sold on its marketplaces.

According to Alibaba, some of those measures include: the use of data-mining technology to analyze and track transactions of IPR-infringing products; working with Chinese public security, copyright, quality inspection and intellectual property agencies to take the online fight against counterfeits offline; and random checks using third parties to purchase suspected counterfeit products on its marketplaces.

“We work closely with our government partners, brands and widened our coalition with industry associations, signing MOUs with BSA, IACC and MPAA to tackle this issue at its source,” Alibaba’s spokesperson told FN. “Our track record of fighting illicit activities is clear, and like all global companies in our industry, we must continue to do everything we can to stop these activities.”

In its letter to UTSR, AAFA urged Ambassador Froman to deliver a strong message to Alibaba “stating that the status quo will lead to the relisting of TaoBao in the 2015 report” and “send a clear signal that rhetoric without action will not be tolerated.”

The AAFA said that after the USTR delisted Alibaba from its Special 301 Notorious Market List in 2012, the problem of counterfeit apparel and footwear on the site worsened. However, a USTR spokesperson told FN that while the AAFA’s past complaints have been carefully reviewed, the USTR had “determined not to relist Taobao at this time.”

“In the process leading to the 2014 Notorious Markets List, the AAFA and numerous other interested parties submitted comments for consideration. In determining the 2014 list, published on March 5, 2015, the USTR carefully reviewed the AAFA submission and all other submissions as well,” said the USTR’s spokesperson. “With respect to Taobao, the 2014 list identified both signs of progress as well as concerns.”

The spokesperson also noted that USTR has “encouraged [Alibaba] to continue working with all stakeholders to address ongoing complaints,” adding that it “will continue to monitor the situation.”

The 2015 Notorious Markets List will be determined by a similar process, the USTR spokesperson added.

The USTR also heads a yearly Special 301 Process on the state of intellectual property rights protection and enforcement with trading partners around the world, leading to a report that will be issued at the end of April.

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