AAFA Calls Out Alibaba's Flawed Anti-Counterfeiting Efforts

After years of unproductive conversations with Alibaba Group and following an April letter sent to several U.S. government officials, the American Apparel & Footwear Association called for major changes to the Alibaba's anti-counterfeiting procedures.

In a letter to Alibaba executive chairman Jack Ma, AAFA president and CEO Juanita Duggan called for a plan that is more transparent and driven by certified brand owners.

"…we are asking for Alibaba to begin addressing counterfeits in a manner that is transparent, comprehensible, and fast. We are asking for Alibaba to create a process whereby Alibaba removes counterfeits quickly at the request of certified brands," Duggan said in the letter.

The AAFA-proposed plan outlines four key elements: (1) easy brand certification; (2) brand- controlled "take-downs"; (3) brand-approved sales; and (4) a transparent verification process. "Take-downs" are the process in which a counterfeit product is removed from a site.

"No one understands Alibaba's process – it is obviously flawed. What Alibaba has in place is slow, unclear, cumbersome, and full of barriers," said Duggan. "The ultimate metric is whether counterfeits on the sites are permanently removed, and right now, they are not. On any given day, a simple search of a brand will yield hundreds, if not thousands, of results at alarmingly low prices–a giveaway that the products are fake."

In addition to clear and simple procedures, the Association says that metrics need to be put in place and made public. Alibaba's efforts to address counterfeits with some other organizations, companies, and governments are shrouded by non-disclosure agreements, prohibiting the parties that enter into Memoranda of Understanding with Alibaba from talking about the procedures or results. AAFA requires an independent verification process that Alibaba would fund after the two organizations agree on benchmarks.

"There's been a lot of talk but little public, verifiable results," said Duggan. "It should be in everyone's interest, including Alibaba's, that it share its progress."

In April, AAFA sent letters to the U.S. Securities and Exchange Commission and the Office of the United States Trade Representatives calling attention to the "sluggish or non-existent" implementation of updated take-down procedures.

AAFA represents more than 1,000 clothing, shoe, and lifestyle brands. Over the last four years, AAFA has been engaged in on-going conversations with Alibaba representatives on the problem of counterfeits on its Taobao site but has seen no progress, prompting the letters to USTR and the SEC and today's call for a new procedure.

Counterfeits cost clothing and shoe brands millions in lost sales, cause damage to reputation, and incur legal costs and an immense toll on internal resources. AAFA estimates the total impact of intellectual property (IP) theft on the U.S. fashion industry was a staggering $68 billion in 2013. Eighty percent of U.S. Customs and Border Protection seizures are fashion related.
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