USTR Cites Progress on Global Counterfeiting, as Problems Persist

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photo credit: Customs & Border Protection

While progress continues to be made in policing counterfeiting and pirating of goods and intellectual property around the globe, it remains a serious challenge to legitimate businesses and to consumers.

The U.S. Trade Representative’s 2017 Notorious Markets List highlights 25 online markets and 18 physical markets around the world that are reported to be engaging in and facilitating substantial copyright piracy and trademark counterfeiting.

The report released Friday calls on several e-commerce platforms to improve takedown procedures, proactive measures, and cooperation with right holders—particularly small and medium-sized businesses (SMEs)—to decrease the volume and prevalence of counterfeit and pirated goods on their platforms.

USTR said these activities harm the U.S. economy by undermining the innovation and intellectual property rights (IPR) of U.S. owners of IPR in foreign markets. Imports in counterfeit and pirated physical products is estimated at nearly $500 billion, or around 2.5% of global imports.

“Marketplaces worldwide that contribute to illicit trade cause severe harm to the American economy, innovation and workers,” said USTR Robert Lighthizer.

The 2017 Notorious Markets List maintains its special focus on the distribution of pirated content and counterfeit goods online. This year, the report highlights illicit streaming devices as an emerging piracy model of growing concern.

Over the past year, some market owners and operators have made efforts to address the widespread availability of pirated or counterfeit goods in their markets, the report said. Some governments also continue to institute novel strategies to combat piracy and counterfeiting. These include voluntary initiatives with advertising networks to cut off financial support for websites devoted to copyright infringement, installing intellectual property enforcement centers on-location in high-priority physical markets, and using skills training to reorient former counterfeit sellers toward operating legitimate businesses.

[Read more about counterfeits: US Customs Seizes $54K in Counterfeit Nike Air Jordan Sneakers]

Regarding physical marketplaces, Argentina and Thailand have significantly stepped up enforcement and used novel approaches to increase the sustainability of their efforts.

In January 2017, with the support of the Argentine government, Buenos Aires city authorities evicted 2,000 illegal street vendors from the Once neighborhood. The government relocated these street vendors to nearby commercial facilities and provided them with a stipend and a two-month business-training course organized by the Argentine Confederation of Small and Medium-Sized Enterprises. Nearly one-half of the evicted street vendors are now operating legally from two new locations in Buenos Aires.

At the direction of the Prime Minister, Thailand has focused enforcement efforts on 13 previously listed notorious markets as well as other markets throughout the country. From January to September 2017, Thai authorities carried out more than 700 raids and seized almost 150,000 infringing items. Thailand authorities established on-site IP Enforcement Centers in five high-priority shopping areas to enhance timely responses to complaints, visibility of enforcement, coordination among Thai enforcement agencies, and cooperation with right holders. Also in 2017, the Thai IP office and other enforcement agencies have worked closely with public and private property owners by sending formal letters requesting property owners to monitor and warn their tenants to refrain from selling counterfeit and pirated goods.

The International Chamber of Commerce, Business Action to Stop Counterfeiting and Piracy in September released a new resource on best practices to combat counterfeiting and piracy challenges for landlords and property owners, governments and enforcement agencies.

Regarding the controversial mega site Taobao.com, owned by Alibaba Group, the report said. “A high volume of infringing products reportedly continue to be offered for sale and sold on Taobao.com and stakeholders continue to report challenges and burdens associated with IP enforcement on the platform. In 2017, more SMEs have requested assistance from U.S. government agencies and embassies regarding Taobao.com than any other ecommerce platform.”

Taobao.com is China’s largest mobile commerce destination and the third-most popular website in China. Alibaba has undertaken efforts, some within the last six months, to curb the offer and sale of infringing products on Taobao.com, and some right holders report an improved outlook as a result, USTR said.

“At the same time, the prevalence of infringing listings and sales continues to be a challenge and there are additional steps Alibaba must take to address ongoing concerns,” the report added. “While two U.S. trade associations reported better dialogue with Alibaba and some improvements in online enforcement on Taobao.com and other Alibaba platforms, the relatively high numbers of counterfeits on these sites continue to be a challenge for many U.S. brands.”

Rick Helfenbein, president and chief executive officer of the American Apparel & Footwear Association, which had taken action against Alibaba over Taobao.com’s selling of counterfeit goods, said the report, “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.”

Helfenbein credited USTR, the Department of Commerce and the other government agencies for “incorporating AAFA’s input in this valued report.”

In its submission, Alibaba said it created a one-stop site for takedown requests across all Alibaba platforms with a simple user interface that imposes no requirement to create an account before using the takedown mechanism. The company asserted that it closed more than 230,000 Taobao.com vendors for selling IP infringing goods over a recent one-year period, decreased takedown process times on the Taobao family of marketplaces and increased proactive takedown efforts on Taobao.com.

However, USTR said while Alibaba presented its considerable efforts to address many concerns identified in the 2016 List, important unresolved concerns remain. For example, Alibaba has not identified metrics to assess objectively the scale of infringing products sold on Taobao.com nor objectively demonstrated that the volume or prevalence of counterfeit goods has decreased over the last year.

“The data provided by Alibaba to date do not directly reflect the scope and status of the counterfeiting problem on the Taobao.com platform, but instead is merely suggestive of progress made,” the report said. “It is incumbent upon Alibaba to develop more effective means to address the concerns of the full range of U.S. businesses that continue to find infringing versions of their products for sale on Taobao.com.”

Meanwhile USTR said 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 report added. It said particular efforts should be focused on the Silk Market and Hongqiao Market in Beijing.

Elsewhere, USTR said with over 270,000 square feet of retail space and more than 500 small shops, the sale of counterfeit goods at Pacific Mall in Ontario, Canada is “sprawling and pervasive. The mall is touted as the largest Chinese mall in the western world and a recognized tourist destination but it has also been a well-known market for the sale of counterfeit and pirate goods for over a decade.”

It also cited the Tank Road in Delhi, India; the Mangga Dua in Jakarta, Indonesia; the Mercato dei venerid in Ventimiglia, Italy, and El Tepito in Mexico City as among the most infamous markets in the world for the sale of counterfeit and pirated goods.

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