AAFA Criticizes Alibaba's Defense of Counterfeit Listings

The American Apparel and Footwear Association criticized the Alibaba Group's justification for why it hosts a great deal of counterfeit sales listings, in an Oct. 21 rebuttal (here) to earlier Alibaba comments filed in response to the Office of the U.S. Trade Representative’s request for input on its 2016 Notorious Markets Report. Though AAFA commended Alibaba for filing comments reflecting public commitments and statements company executives made during the past year to crack down on counterfeiters’ use of its platforms, the trade group said Alibaba’s comments (here) amounted to a “so big it fails” defense, in justification of the high number of merchants and listings on its sites. “We patently reject that defense, particularly since Alibaba continues to expand its reach and has announced plans to grow even more,” wrote AAFA Executive Vice President Stephen Lamar in the rebuttal. “Citing its size as an obstacle to addressing a counterfeit problem it has enabled and unleashed is deeply troubling.”

In Alibaba’s comments, Alibaba Head of International Government Affairs Eric Pelletier said that few companies, “none, to our knowledge,” addressed intellectual property issues on the scale that Alibaba has over the past year. “Commensurate with the size of the Alibaba marketplaces, Alibaba has made staggering investments in technology to implement its proactive takedown program,” Pelletier said. “Our anti-counterfeiting system has the capacity to process 100 million pieces of data per second, which enables us to conduct proactive scans on more than ten million product listings a day.” However, Alibaba also noted that “any marketplace” with more than 1.5 billion listings and 7 million merchants operating “at any given time will have some number of counterfeit listings,” and said the existence of those listings in itself doesn’t indicate that a market is notorious or lacks proper procedures.

AAFA also knocked Alibaba’s presentation of counterfeit enforcement statistics in its Oct. 7 filing, saying the company didn’t provide context, or time and scale benchmarks for its cited proactive removals of 380 million product listings between August 2015 and August 2016. It’s unclear how those eliminations compare with the 1.5 billion total listings that Alibaba said are on its platforms “at any given time,” and Lamar questioned whether other counterfeit listings replaced those removals, noting that would align with the reports of several AAFA members.

The Trademark Working Group also provided comments (here) to USTR on Oct. 7, and listed physical and online markets in 42 countries that it said should be added to the Notorious Markets List. The group also recommended that Alibaba and Taobao be added to the list, citing an August Chinese State Administration for Industry and Commerce study indicating 60 percent of goods sold on the platform were found to be counterfeit or pirated. The U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) more broadly commented on the Notorious Markets Report (here), noting that counterfeits have doubled since 2005, and now total $461 billion, or 2.5 percent of global trade. The chamber-created Global Brand Council determined that China and Hong Kong together account for 86 percent of global physical counterfeiting, the GIPC said in its comments. Alibaba didn’t comment.