As the world’s largest online retailer, Alibaba regularly encounters trouble with brand owners for counterfeits sold on its websites. On May 5, 2015, Kering, a French company who owns Gucci and Yves Saint Laurent, sued Alibaba for the second time within less a year over the counterfeit products allegedly sold on Alibaba’s websites, Taobao, in particular. (Gucci America, Inc. et al v. Alibaba Group Holding Ltd. et al (NYSD, Case No. 15-cv-03784) (see, here). According to an article published at Forbes.com on November 4, 2015 (here), after the author’s interview with Alibaba’s chairman, Jack Ma, the author suggests that perhaps Alibaba itself is responsible for why counterfeit problems on Taobao cannot be solved.
According to the article, Ma insisted that Alibaba would not settle the case. “‘I would [rather] lose the case, lose the money,’ says Ma. ‘But we would gain our dignity and respect.’” He also considered that “it is unfair for that guy [the seller]. We have to also protect these guys, not only the branded businesses. You have to care about all the people, their rights.”
These remarks will certainly make any reader raise an eyebrow. Respect for infringers? To preserve their rights to sell counterfeit goods? If such rights exist and Alibaba actually cares, then why does Alibaba claim to have spent millions of dollars fighting piracy and implementing its system to detect and remove listings/sellers of fake products? Merely sham efforts to remove itself from the US list of notorious markets as suggested in the article, perhaps. Possibly, Taobao has learned a lesson after losing a 2011 case in China (Yinian (Shanghai) Fashion Co., Ltd. v. Taobao Network Co., Ltd. and Guofa Du) (see, here) where the court found Taobao jointly and severally liable with the infringer because Taobao should have somehow stopped the repeatedly infringing user other than simply taking down the infringing listings when receiving a notice. But, if as stated in the article, for some named brands, up to 80% of their merchandise sold on Taobao as branded product is actually fake, Taobao would have a strong incentive to be lenient to its users. Taobao would lose big by removing all the infringing listings. Then, no matter what Ma really thinks, this case may serve as a counter-incentive for Taobao to continue its allegedly passive policy against piracy and thus benefit all brand owners.
Nonetheless, policing and enforcing the trademark rights are burdens carried mainly by rights owners. For whatever reason Alibaba is now playing by the rules, at least seemingly. Litigation is costly, either in the home state, or particularly, in a foreign jurisdiction. In the meantime, brand owners do not have to rush to a court to start their battle with piracy on Taobao for small infringers. Kering’s case may represent them all. Kering did not take this litigation route in the beginning either. First of all, small infringers are hard to catch and might not have anything to lose. Taobao and Alibaba have deep pockets and thus are better targets. Secondly, Alibaba might not have done enough to fight piracy, but for brand owners, especially for those with limited resources, the most cost effective way to remove an infringing listing on Taobao is still to report it with Alibaba through AliProtect, Alibaba’s reporting platform, and have Alibaba take down the infringing listing. After all, a cost-benefit analysis is always the first thing a rights owner needs to take into consideration when enforcing rights. If Kering can force Taobao to implement an anti-piracy system that is friendlier to brand owners, why not just wait and see? Maybe there will be a windfall for those who simply keep an eye out on this case.