Alibaba recruiting brands to escalate fight against fakes

Dive Brief:

Alibaba will establish an "Intellectual Property Advisory Board" that includes brands and trade associations to help fight the massive volume of counterfeit goods sold on its marketplaces, according to its October public letter to Probir Mehta, Assistant United States Trade Representative for Intellectual Property and Innovation, regarding the trade office's consideration of so-called Notorious Markets. A spokesperson confirmed the development of the board to Retail Dive by email on Friday.
The announcement comes a day after United States Trade Representative Michael Froman said that Alibaba's Taobao marketplace was added back to its list of Notorious Markets for 2016 — a move which several brands and trade associations lobbied for.
Alibaba Group CEO Daniel Zhang on Thursday publicly released an email he sent to the company’s Platform Governance team addressing the USTR report, characterizing it as a form of protectionism, praising the team’s work against counterfeiters and encouraging them to redouble their efforts.

Dive Insight:

The "IP advisory board" that Alibaba outlines in its letter will meet first in March next year, and members will serve rotating terms, according to the Alibaba spokesperson. Otherwise, details are murky at best: Alibaba didn’t identify any brands or groups involved, and it’s not clear whether brands or trade associations would participate, considering the low level of trust.

In May, the Washington, D.C.-based International AntiCounterfeiting Coalition (IACC) suspended Alibaba Group's membership following outcry from global brands and members over its inclusion. In fact, Gucci America, Michael Kors and Tiffany & Co. left the group altogether after Alibaba joined, saying the IACC was providing cover to the Chinese e-commerce giant’s marketplaces, where counterfeits are rife.

Then, speaking in June at at Alibaba Group's first investor day conference, executive chairman and founder Jack Ma did himself no favors when he said that many knockoffs available on the company’s marketplaces are of better quality than the authentic products they mimic. Ma nevertheless pledged that the company would continue to crack down on sales of counterfeit goods across its platform, and later sought to clarify his remarks in a Wall Street Journal editorial. Since then, several brands have been on the warpath, with trade groups pressuring the USTR to add Alibaba back to its blacklist.

Some 80% of branded products sold on Taobao are fake, Bharat Dube, chief executive of Strategic IP Information, which works with brands like L’Occitane en Provence to remove fake items, told The Wall Street Journal. But in his letter Thursday, Zhang sought to counter the notion that Alibaba isn’t working hard enough on the issue. “We are disappointed today, but not because we didn’t fight hard enough,” he writes. “It is because even though we gave it our all and then some, the United States Trade Representative has returned Taobao to the “Notorious Markets” list.”

Calling the battle against counterfeits "[A] fight against the dark side of human nature ... Counterfeiters are like bacteria in the air that we breathe," Zhang said Alibaba's platform governance team identified and removed a number of links to infringing products that was 16 times the number of links reported by rights owners. Working with law enforcement, Alibaba also shut down many counterfeit-manufacturing factories and sent more than 800 bootleggers to prison to protect brand owners, he added. The company even touted its big-data anti-counterfeit operations in a report released earlier this month titled “Counterfeiters can run, but can’t hide from Alibaba’s big data.”

“In today’s world, counterfeit manufacturers and sellers are global operations,” Zhang writes. “Our platform governance team rose up to the challenge and was relentless in the fight over the past year. Platform governance team, you are the pride of Alibaba.”