Alibaba’s Taobao is one of 25 online markets that made the blacklist

Alibaba’s Taobao is one of 25 online markets that made the blacklist

Chinese online retail giant Alibaba has questioned the credibility of America's 'Notorious Markets List' after its Taobao marketplace was featured for a second consecutive year – a move that has now turned into a diplomatic row following the involvement of the Chinese government.

The Office of the United States Trade Representative (USTR) released its 2017 Out-of-Cycle Review of Notorious Markets report on 12 January. It lists marketplaces – both digital and physical – that it claims facilitate substantial intellectual property (IP) infringement, with those located in China the most prevalent this year.

Alibaba's Taobao – China's largest e-commerce marketplace – is one of 25 online markets, along with 18 physical markets, that made the blacklist. It had stayed off the list from 2012 to 2015, but was included in 2016 and again in 2017.

In its report USTR states: "As in past years, several commenters continue to identify China as the primary source of counterfeit products. Some Chinese markets, particularly in larger cities, have adopted policies and procedures intended to limit the availability of counterfeit merchandise, but these policies are not widely adopted, and enforcement remains inconsistent."

The agency acknowledged Alibaba's efforts over the last six months to curb the sale of infringing products on Taobao, but said the prevalence of infringing listings and sales continues to be a challenge. 

In response, the Chinese e-commerce giant released an 11-page rebuttal to each point in the report, stating that it "proves nothing."

"Alibaba is the biggest e-commerce platform in the world. It is not appropriate to compare platforms by simply counting complaints with no context. What about Amazon, eBay and others? USTR has no basis for comparison, because it does not ask for similar data from US companies," it stated.

Earlier this week, the retailer rolled out a series of online and offline initiatives aimed at further tightening intellectual property rights protection.

Looking to secure its online platforms, Alibaba told brands and rights holders gathered in the southern city of Guangzhou that it was stepping up joint, anonymous purchases of branded goods with Alibaba Anti-Counterfeiting Alliance members. The goal is to pool their information and leverage the expertise of the brands and rights holders to build a stronger database.

Yet in a further response to the listing, the retailer told World Trademark Review (WTR) this week that brand owners should no longer trust the report – a view now reportedly shared by the Chinese government, which has publicly questioned the credibility of the List.

According to WTR, China's Commerce Ministry claims the report lacks "solid evidence" to include the nine Chinese marketplaces accused of engaging in rampant IP infringement.

Meanwhile, the American Apparel & Footwear Association (AAFA) has praised the USTR on the publication of the report, stating its importance in the fight to protect intellectual property.

"By identifying marketplaces that promote the sale of counterfeit products, we are all able to prioritise areas of risk for governments, law enforcement, and brands to better monitor and combat IP infringement," said Rick Helfenbein, AAFA president and CEO. "This report also provides consumers with information on marketplaces that are selling fake products that oftentimes do not meet safety and other standards. Protecting intellectual property is a never-ending task and requires continuous improvement.

"If you are standing still in the fight against counterfeits, you are moving backwards. Therefore, it is essential that governments, law enforcement authorities, and brands collaborate to stem the flow of counterfeit merchandise. This report is an essential part of the process to protect intellectual property rights and innovation."

Click here to access the Notorious Markets List, and here to view Alibaba's 11-page response.