U.S. Removes Taobao From “Notorious” List of Pirate Markets

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U.S. Removes Taobao From “Notorious” List of Pirate Markets

Recognizing its “notable efforts” to better protect intellectual property rights, the United States Trade Representive (USTR) has removed Alibaba Group’s Taobao Marketplace, China’smost popularonline shopping destination, from a list of marketplaces around the world that the Washington agency identifies as hotbeds for counterfeiting and piracy.

The action was announced today by Ambassador Ron Kirk, USTR chief, as part of the agency’s Review of Notorious Markets, an annual report that names and shames websites and physical venues around the world “that have a negative impact on legitimate businesses and industries of all sizes that rely on intellectual property to protect their goods and services,” Kirk said. The report lists more than 30 markets, among them Sweden’s ThePirateBay and Chinese e-commerce website Paipai, that the USTR sayspromote heavy trafficking in infringing digital content and other merchandise.

(To read the USTR report, click here.)

The USTR removed eight previously listed notorious markets either because they had been shut down by law enforcement or because of voluntary actions by their operators to combat piracy. Kirk singled out Taobao as a positive example the latter “because (Taobao) has undertaken notable efforts over the past year to work with (intellectual property) rightsholders directly or through their industry associations to clean up its site.” Taobao had been on the notorious markets list since 2008.

John Spelich, spokesman for Alibaba Group, Taobao’s China-based parent company, expressed appreciation forthe action. “We would like to thank the USTR for the acknowledgment of our efforts,” Spelich said. “The IPR issue is a long march in China, this is a milestone and it is only the beginning.”

Taobao Marketplace (Taobao.com), a open Chinese e-commerce platform that allows millions of small businesses to sell goods via the Internet, has acknowledged it faces challenges in keeping counterfeitand infringing merchandiseout of sellers’ electronic storefronts. On any given day, more than 800 million products are available on Taobao Marketplace, which has nearly 500 million registered users.

The Taobao platforms, Taobao Marketplace and sister website Tmall, dominate online shopping in China. Taobao Marketplace holds a 90 percent share of the country’s C2C (consumer-to-consumer) market, according to Macquarie Equities Research; Tmall accounts for 54 percent of the B2C (business-to-consumer) market.

Officials for Taobao have long maintained to the USTR that counterfeits make up a relatively small percentage of goods availableand thatits sites were being unfairly lumped in with Beijing’s infamous Silk Market and piratesites such as MegaUpload,a “cyberlocker” for sharingillegal digitalcontent that was prosecuted by the U.S. Department of Justice earlier this year.”Taobao is not remotely similar to the other markets that have appeared on the Notorious Markets list,” the company stated in a document submitted to the USTR on Sept. 14. “Taobao is not designed with the purpose of allowing the sale of pirated or counterfeit material. It is a sophisticated e-commerce business akin to eBay. It has no interest in tolerating illicit sales across its platforms. In fact, such activity serves only to damage Taobao’s brand and reputation for quality.”

In a Feb. 10 letter to the USTR, Taobao Marketplaceoutlined improvements the company has made in monitoring for Chinese merchants selling fakes, detailed toughened penalties againstsellers deemed to be violating website policies against pirated goods, and cited streamlined procedures by which American companies can complain online about intellectual property rights violations, among other actions. In the first 10 months of 2012, Taobao says it removed more than82 million listings for counterfeit productsat the request of brand owners and through monitoring of the website.

Taobao recentlysigned an agreement to work with the U.S.-based Motion Picture Association (MPA), a group of six major international film studios, to fight piracy by “strengthening existing standards, mechanisms, and mutual responsibilities concerning the identification and removal of copies of MPA member company content from Taobao.com.” Taobao also made a deal to cooperate with the International AntiCounterfeiting Coalition.

However,the websitehas yet to reach similar agreements with industry groups such as the Business Software Alliance, a piracy-fighting organization whose members include Microsoft and other major software companies.

The USTR in today’s announcement indicated Taobao’s removal might not be permanent. “In order to stay off the list in the future, we urge Taobao to further streamline procedures for submitting and responding to notifications to decrease the time required for taking down listings of counterfeit and pirated goods,” USTR officials said, adding that the company should “continue its efforts to work with and achieve a satisfactory outcome with U.S. rights holders and industry associations (for example in the apparel and footwear and software industries), as well as U.S. based small and medium-sized enterprises.”

The USTR’s action “is merely another acknowledgement of the hard work our team is doing in the field of IPR protection,” said Spelich, the Alibaba Group spokesman, in a prepared statement. “Our ongoing commitment to intellectual property protection is predicated on our desire to do the right thing and create a healthy and sustainable platform for buyers, sellers and rights holders alike. We look forward to continuing to collaborate with all stakeholders to pursue effective and broad-based protection mechanisms and initiatives.”

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