- Taobao remains on USTR Notorious Markets list for second straight year
- USTR identifies steps Alibaba “must take” to address concerns over fakes
- In response, Alibaba Group claims USTR is trying to score political points
The Office of the US Trade Representative’s (USTR) has released the latest edition of its annual Special 301 Out-of-Cycle Review of Notorious Markets, in which it highlights marketplaces that it claims facilitate substantial intellectual property infringement. Alibaba Group's Taobao remains on the list – with the report stating that the Chinese marketplace giant must develop “more effective” tools to combat infringing goods being sold on its platforms. In response, Alibaba has labelled itself “a scapegoat for the USTR to win points in a highly-politicized environment”.
The Notorious Markets list primarily highlights online and physical spaces that engage in or facilitate substantial copyright piracy and trademark counterfeiting. A majority of the websites in this year’s list are included due to rampant copyright infringement (most often file-sharing and streaming movies), but a number were included due to high levels of counterfeiting activity. Two online marketplaces added this year were Chinese business-to-business marketplace DHGate and Indian marketplace IndiaMart (the former for being “a leading online marketplace for the sale and distribution of counterfeit and pirated academic textbooks”, the latter because it “allegedly facilitates global trade in counterfeit and illegal pharmaceuticals”).
However, it is the continued presence of Taobao – which was re-added to the Notorious Markets list last year after a four year absence – which is most notable. Last year the company’s CEO described the development as a "disappointing moment for all of us". In the time since, Alibaba has proactively pushed its IP credentials, with a steady flow of press releases on various enforcement drives and refinements to its rights protection mechanisms. In its strongly-worded submission to the USTR in October, Alibaba claimed it has “established industry best practices in IP protection”, with a spokesperson saying: “More than 100,000 brands do business on Alibaba’s platforms – a testament to the trust companies and consumers have in our marketplaces. We closely collaborate with brands, associations and regulators to maintain the integrity of our marketplaces. Our recent USTR submission describes our steadfast efforts to protect brands and reflects our strong commitment to intellectual property rights protection.”
Today’s publication, then, is a clear blow to the organisation. In the 2017 report, the USTR commends Alibaba “for its efforts to date”, but claims that “a high volume of infringing products reportedly continue to be offered for sale and sold on Taobao.com and stakeholders continue to report challenges and burdens associated with IP enforcement on the platform”. It further says SMEs reported “problems accessing and utilizing takedown procedures”, with others claiming “delays or burdensome aspects of takedown programs”. Another criticism is that Alibaba “has not identified metrics to assess objectively the scale of infringing products sold on Taobao.com nor objectively demonstrated that the volume or prevalence of counterfeit goods has decreased over the last year”, stating that the data Alibaba has provided “does not directly reflect the scope and status of the counterfeiting problem”.
Obviously aware that Alibaba Group is keen for Taobao to be removed from the list, the USTR provided some clear guidelines it must follow if it wants to avoid being on it for a third-year running. Specifically, it recommends the company:
- “Seriously consider expanding its reported ban on automotive airbags and airbag components listings on the Alibaba.com and AliExpress.com platforms to the Taobao.com platform, and to other widely-counterfeited products not ordinarily sold in C2C marketplaces, such as brake pads and other automotive parts.”
- “Take efforts to ensure that its referrals of criminal leads to Chinese authorities lead to meaningful enforcement outcomes, such as by targeting large manufacturers and distributors of counterfeit goods” (a move it arguably already does, but apparently not enough).
- “Seek to improve the effectiveness of the repeat infringer policy.”
- “Make available to right holders the contact information of infringing sellers and details on the volume of infringing sales after infringing listings are removed so that right holders can follow-up with enforcement action.”
- “Seek SME input and provide advisory opportunities to develop more effective policies to address the challenges SMEs face on Taobao.com and other platforms.”
- “Improve tools to prevent the unauthorized use of product images for the sale of infringing products.”
- “Ensure that infringing sellers and goods do not migrate from TMall or Taobao.com to other platforms owned and operated by Alibaba, such as Xian Yu, located at ‘2.taobao.com’.”
The immediate response from Alibaba was more combative than last year's rejoinder. In a strongly-worded statement, an Alibaba spokesperson declared: “As a result of the rise of trade protectionism, Alibaba has been turned into a scapegoat by the USTR to win points in a highly-politicized environment and their actions should be recognized for what they are. The USTR’s actions made it clear that the Notorious Markets List, which only targets non-US marketplaces, is not about intellectual property protection, but just another instrument to achieve the US Government’s geopolitical objectives. Alibaba reiterates our point of view: we will continue to strengthen our IP protection system with world leading technology and a collaborative approach with brands and other stakeholders. Our efforts and results speak for themselves: over 100,000 brands, including 75% of the world’s most valuable consumer brands, do business on our platform.” It also sent across a list of third party support that the company has received in the past 12 months, including positive endorsements from brands including Amway, Dyson, Jewelry.com, Mars Inc, Spalding, and Swarovski.
Today’s publication signal’s the starting gun on another 12 months of campaigning by Alibaba, as it looks to be removed from next year’s list. For brand owners the hope is that the e-ecommerce giant is spurred to continue strengthening its policing efforts and rights protection mechanisms even more, rather than throwing its hands up in frustration and embarking on a war of words with the USTR.