Thursday, April 28, 2016

ALIBABA STILL FIGHTING FAKE GOODS ISSUES

Brands Voice Doubts After Alibaba Joins Group Fighting Fake Goods

Michael Kors said Alibaba’s admission to the U.S. anticounterfeiting group provides ‘cover to our most dangerous and damaging adversary’


Alibaba founder Jack Ma has said earlier this year that the company will spare no expense in ridding its platforms of counterfeit goods. ENLARGE
Alibaba founder Jack Ma has said earlier this year that the company will spare no expense in ridding its platforms of counterfeit goods. Photo: Associated Press
When Alibaba Group Holding Ltd. BABA -0.26 % joined one of the world’s largest anticounterfeiting groups this month, the Chinese e-commerce giant hailed the move as a signal of its commitment to removing fake goods from its shopping platforms.
But the admission of Alibaba to the Washington-based International AntiCounterfeiting Coalition—a nonprofit group of around 250 members dedicated to combating counterfeiting and piracy—has sparked a backlash from some brands skeptical of Alibaba’s sincerity in weeding out the large volume of counterfeits on its platforms.
Last week, U.S. fashion brand Michael Kors canceled its membership in the group, citing the organization’s decision to welcome Alibaba into the fold. French luxury brand Longchamp and an anticounterfeiting coalition of French and global brands known as Unifab also criticized IACC’s decision.
In a letter to the IACC, Michael Kors Holdings Ltd. KORS -1.05 % said Alibaba’s admission to the U.S. anticounterfeiting group provides “cover to our most dangerous and damaging adversary” at a time when many brands are considering filing lawsuits to force Alibaba to remove counterfeits from its sites.
“Alibaba’s strategy has consistently been to provide lip service to supporting brand enforcement efforts, while doing as little as possible to impede the massive flow of counterfeit merchandise on its platforms,” Lee Sporn, general counsel for Michael Kors, wrote in the letter, which was reviewed by The Wall Street Journal. Mr. Sporn declined to be interviewed.

Alibaba said it is committed to doing whatever it takes to fight counterfeit goods on its platform. The e-commerce company sees IACC membership as “another great step” toward working with brands in tackling fake goods online, Matthew Bassiur, Alibaba’s head of global intellectual-property enforcement, said in a statement.
Roughly two dozen brands and other IACC members have privately expressed support in emails and phone calls for Michael Kors’s position but are reluctant to be named because they are working with Alibaba on removing counterfeits, according to Barbara Kolsun, a former IACC chair and a professor at the Cardozo School of Law in New York. The Journal has reviewed some of these emails.
Unifab, which has roughly 400 members, told the Journal that brands are considering taking a variety of actions against Alibaba if the e-commerce company doesn’t quickly adopt stronger measures to remove counterfeits.
IACC President Bob Barchiesi said its 21-member board’s unanimous vote to admit Alibaba gives members a way to work more directly and collaboratively with the e-commerce company to address counterfeit and pirated goods. Some brands that belong to Unifab are also part of the board, he said.
Earlier this month, IACC called Alibaba “one of our strongest partners” in combating counterfeits and piracy in announcing the company’s membership. The coalition has invited Alibaba founder Jack Ma to give the keynote address at its annual conference for global brands in May.
The Recording Industry Association of America, whose representative sits on IACC’s board, said it understands brand owners’ concerns regarding Alibaba. “But I don’t understand why having them as a member is a terrible thing,” said Brad Buckles, the group’s executive vice president of antipiracy. “It brings them into the room. They have to look across the table at us.”
 
The controversy comes four months after U.S. trade officials warned Alibaba that it needs to step up its efforts to fight counterfeits on both Taobao, the company’s massive online bazaar, and Tmall, a sales venue largely for brand owners.
Alibaba said it is working to make it easier to get counterfeiters off its sites. The company said its partnership with IACC two years ago on a program that speeds up the process of removing infringing listings from Alibaba’s sites has led to nearly 5,000 virtual storefronts being closed and sellers permanently banned from its marketplaces.
The e-commerce company also said it has created a program last year to allow brand owners with a reliable track record of submitting claims to get fake product listings taken off its sites quickly and simply.
Some brands say they have difficulty joining this program, and note that counterfeits of their brands on Alibaba’s platforms haven’t lessened significantly.
Brands also want Alibaba to adopt proactive measures to screen out counterfeit items so they don’t get sold on the platforms in the first place, according to interviews with brands and their lawyers.
Alibaba’s efforts thus far to take counterfeit listings off its sites are a “drop in the bucket compared to the grand scale of the problem,” said Kristina Montanaro Schrader, a Nashville-based lawyer representing more than a dozen brands.
Luxury brands owned by Paris-based Kering SA, KER 0.57 % which include Gucci and Balenciaga, among others, have already sued Alibaba, claiming in legal filings that the company encourages and profits from the sale of counterfeits on its platforms. That case is pending.
Alibaba has said the lawsuit has no basis and cited its “strong track record” of helping brands.
Brands that are members of Unifab are still waiting for “convincing results” following Alibaba’s promises over the past few years to fight counterfeits, according to Delphine Sarfati-Sobreira, director general of the group.
Alibaba said that it is “part of the solution, not the problem,” adding that it has shown IACC it is serious about brand protection.
IACC’s Mr. Barchiesi said the trade group must do what’s best for the majority of its members, and Alibaba has shown that it can do a “pretty good job” in working with brands to fight fake goods on its sites.
Write to Kathy Chu at kathy.chu@wsj.com