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Alibaba Enlists Brands to Help Snuff Out Knockoffs
Advisory board is intended to improve intellectual-property enforcement
By LIZA LIN
Dec. 23, 2016 2:12 a.m. ET
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Chinese e-commerce giant Alibaba Group Holding Ltd., facing U.S. criticism over the presence of counterfeit and pirated goods on its online shopping platforms, said it would establish an advisory board of brands and trade associations to help protect intellectual property.
An Alibaba spokesman said Friday that the company would work with representatives from international brands and smaller enterprises in the U.S. and elsewhere to help stamp out sellers of knockoff goods. It didn’t identify the enterprises or representatives involved. Board members would serve rotating terms and would meet for the first time in March, the Hangzhou-based firm said.
The move follows a decision by the U.S. Trade Representative this week to put Alibaba back on a register of physical and online markets it says are notorious for selling fakes. The agency singled out Alibaba’s flea-market-style Taobao shopping platform, which hadn’t made the list since 2011, citing rights holders’ complaints regarding obstacles to removing counterfeit items from the site.
Taobao—which connects individuals, and small- and medium-size merchants with buyers—is China’s most popular e-commerce site. It had 439 million annual active buyers on its China retail marketplaces in the 12 months ended Sept. 30, Alibaba said last month, up 14% from a year earlier.
Some were skeptical of Alibaba’s pledge to tackle counterfeits, and a quick search on Taobao on Friday underscored the challenge. Items such as imitation Zara leather bags were selling for 118 yuan (about $17), and reproductions of Donald Trump’s “The Art of the Deal” were going for 10 yuan, along with other paperbacks.
Up to 80% of the products with some form of branding sold on Taobao are fake, said Bharat Dube, chief executive of Strategic IP Information, which works with brands such as L’Occitane en Provence to remove offending items.
“Alibaba has been paying lip service to removing counterfeits rather than taking effective steps,” said Mr. Dube, who was previously global anticounterfeiting chief for Cie. Financière Richemont SA, whose brands include Cartier and Montblanc.
‘Alibaba has been paying lip service to removing counterfeits rather than taking effective steps.’
—Bharat Dube, CEO of Strategic IP Information
Alibaba said it had removed more than 380 million counterfeit product listings for the year through August, more than double that of 2015. It has also closed 180,000 offending stores and said it is working with more than 1,100 brands, including Cartier and LVMH Moët Hennessy Louis Vuitton SE, under its anticounterfeiting “good-faith program.” The program lets brands notify Alibaba of products that violate their intellectual-property rights and have those listings removed.
Still, the Chinese retailer needs to go beyond a “PR stunt” in setting up a trade advisory board, said Armando Branchini, vice president of Fondazione Altagamma, a trade association representing Italian luxury brands, including Kering SA’s Gucci. Kering brought a lawsuit against Alibaba last year alleging the online marketplace encourages the sale of fake goods on its platforms.
Alibaba must be serious about working with brands to crack down on counterfeits by meeting face to face, having productive discussions and laying out concrete measures to take, Mr. Branchini said. For every one Italian luxury bag, there are at least 10,000 similar counterfeits sold in China, he estimated. Taobao is also a global platform, enabling customers to purchase fake items outside China as well, causing further damage to brands, he said.
Among the offenses on Taobao is outright counterfeiting, where a product and trademark are replicated. Another problem for brands is the use of their logos on products unrelated to those they manufacture, such as the use of a Rolex mark on a T-shirt, Mr. Dube said. Strategic IP puts in about 50,000 requests each month asking Taobao to remove counterfeit sale posts. Still, Mr. Dube said, it takes Taobao as long as two days to remove those posts, and they often face much resistance from the platform before doing so. This compares with removal time of about half a day on eBay Inc., he said. Alibaba said the removal time for brands in its good-faith program is under 12 hours.
The U.S. Trade Representative’s notorious-markets list names companies and countries it says don’t take steps to stop counterfeiters. It doesn’t set official U.S. policy, but the list’s prominence can bring significant pressure to Washington’s international negotiations and interactions with companies, and U.S. lawmakers frequently cite the markets identified on the register.
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