Alibaba has released its annual report for platform governance, revealing that in 2016 it seized counterfeit goods worth three billion yuan, double the value of goods seized the previous year.
Alibaba says this is because the company has been making significant investments into proactively seeking out breaches in copyright on its ecommerce platforms, rather than relying on reactive complaints.
According to the report, in 2016 the proactive cases were 26 times higher than the number of reactive cases, whereas in 2015 the number was just eight times higher.
Speaking to The Drum about the report, Jessie Zheng, Alibaba Group chief platform governance officer, said the upward trend in the data was due to the use of technology to find information and supply leads to the police, as well as introducing the use of litigation within its anti-counterfeit toolbox.
“We spare no expense and manpower to upgrade our team. We are not only the operator of the largest marketplaces globally, we are also a leader in protecting IPR on ecommerce marketplaces. No other company in the world has been dedicated as much resources ranging from technology, people and partnerships with brands, governments and law enforcement to fight the counterfeits that plague both online and offline commerce,” she said.
Since December last year, the company has already filed high profile cases protecting the IP of well known brands. “In December 2016, Alibaba filed a civil lawsuit against two counterfeit Swarovski watch sellers operating on Taobao – marking the first time a Chinese ecommerce company had sued counterfeit sellers operating on its platform. In February 2017, Alibaba filed a lawsuit for the misuse of our IPP platform by intellectual property agency Hangzhou Network Technology Co. Ltd., which was believed to have submitted spurious and fraudulent IPR complaints to gain a competitive advantage on behalf of their clients. Alibaba is seeking RMB 1.1 million in damages, and is demanding a public apology. In March, Alibaba filed another lawsuit against a Taobao seller allegedly selling fake Mars branded cat food,” explained Zheng.
The counterfeit goods issue isn’t only Alibaba’s issue and many in the industry have questioned whether China, as a country, has a reputation around IP regulatory issues, with some even questioning the impact it has on homegrown Chinese brands. Jack Ma himself has said that fake goods create “havoc” for innovation in China.
However, Alibaba has a lot at stake and it is now putting its money and efforts into attempting to address this reputational issue. According to the report, spend on its ‘test-buy’ programme, in which it buys goods to do spot checks, increased to over $12m across a total of 84,000 sample orders.
Last year Alibaba countered negative press that surrounded its membership of the International Anti-counterfeit Coalition (IAC), of which some major brands objected.
Alibaba also found itself back on America’s Notorious Markets list last year . It has since launched efforts, such as the Alibaba Anti-Counterfeiting Alliance, AACA, alongside major brands such as Samsung, Mars and Louis Vuitton.
Technology has played a large part in growing the success of proactive detection, using its access to huge levels of ecommerce data, as well as machine learning to improve the process.
According to Zheng, collaboration with the industry is also key to the success of curbing IP infringement: “We encourage broader collaboration among various stakeholder groups. In 2016, these efforts include upgrading Intellectual Property Protection(IPP) complaints system that integrates cross-marketplace user accounts and allows for more interactions and inquiries; an IP Joint Force System that gives rights holders the ability to partner with Alibaba in identifying infringing listings; and in establishing an alliance to promote product authenticity.
“In January 2017, Alibaba announced the establishment of Alibaba Group Anti-Counterfeiting Alliance (AACA) with more than 20 international brands. Founding members of the alliance include Louis Vuitton, Swarovski, and Dulux, among others. In April, AACA held an initial working meeting focused on using data and technology to fight online and offline counterfeiting. During a day of open and constructive dialogue, the Alliance agreed on the critical prerequisites of a healthy environment for intellectual property rights protection and how - using data, technology and advocacy - all members can work together with Alibaba to enhance their effectiveness in this global fight against Counterfeits,” commented Zheng.
The missing link for Alibaba now, however, is tougher laws. “The online world is a microcosm of society at large. Problems that we see on the internet are often a manifestation of social problems that used to be hidden and scattered in the offline world. Maintaining the health of any ecosystem, online or offline, requires the contribution of all stakeholders involved. Brands, e-commerce platforms, and law enforcement personnel must work closely together for a healthy business and social environment.
“Alibaba believes that China’s laws and judicial penalties against counterfeiting must be toughened in order to deter the root of this problem, similar to how authorities, legislators, and the whole society came together to crack down on drunk driving several years ago,” she added.
In 2016, the number of leads given to law enforcement agencies was 1,184, according to Alibaba, and the number of arrests made totaled 880. The number of locations shut down by law enforcement hit 1,419.
Being proactive is starting to pay off too, according to the ecommerce giant. The report revealed that the total rate of refunds due to suspected products declined by 32%.