The U.S. has listed the e-commerce platform, a unit of China’s Alibaba Group, on its 2016 Notorious Markets List, a blacklist of physical and online markets around the world that are reported to be engaging in and facilitating substantial copyright piracy and trademark counterfeiting.

“Tens of millions of American jobs and several trillion dollars of our gross domestic product rely on American creative and innovative industries,” says United States Trade Representative (USTR) Michael Froman. “The marketplaces, tactics and schemes that undermine and threaten America’s creative industries change quickly and require our constant attention. Our Notorious Markets List highlights key examples of online and physical markets all over the world that are linked to significant infringement of American businesses’ intellectual property rights. The 2016 list takes stock of emerging infringement models and adds stream-ripping sites and piracy apps to the list of the most damaging digital marketplaces.”

Taobao stood as China’s largest online shopping destination by volume in 2014, and according to Alexa Internet, Inc.’s traffic rankings, is among the world’s 15 most-popular websites. In its assessment of Taobao, the USTR notes that rights holders in the U.S. and internationally report serious challenges to reducing high levels of counterfeit and pirated goods on the site. Longstanding obstacles to understanding and utilizing basic IP enforcement procedures continue unabated; attempts to report IPR infringement are refused inconsistently; denials of take-down requests contain little to no justification or guidance on how the right holder may amend its notification to get results; error messages stall or prevent use of IP complaint systems; pertinent communications to right holders are not translated from Chinese; and broken hyperlinks prevent direct communication between right holders and Taobao sellers.

Alibaba reportedly has taken steps to address right holders’ concerns on Taobao by, for example, establishing internal offices focused on IPR and appointing experienced officers to guide these efforts, addressing the misuse of brand keywords and blurred trademarks in product images, and developing technology to prevent counterfeit sellers from re-opening. Alibaba claims it has proactively removed more than 380 million product listings and closed approximately 180,000 Taobao stores in the 12 months ending August 2016. The company has also announced a shift from a “four strike” to a “three strike” policy and the launch of policies to expand proactive enforcement efforts. Alibaba’s Good Faith Program is reportedly intended to provide a more effective and efficient avenue for participating right holders to enforce their IPR, and participation has grown with Alibaba’s support. However, the USTR notes that the program remains out of reach for the vast majority of right holders, particularly SMEs, due to stringent eligibility criteria that must be met and maintained over a period of time. There is a reported significant disparity between the timeliness and effectiveness of Alibaba’s responses to complaints submitted by right holders in the Good Faith Program and those outside the program.

In 2017, the U.S. will closely monitor the implementation and effectiveness of the set of prospective actions described in Alibaba’s Notorious Markets List submission. As Alibaba moves forward with its plans to further reform and enhance its enforcement tools across platforms, recommendations highlighted in the USTR's 2015 list remain valid, namely: simplifying processes for right holders to register and request enforcement action; making good faith takedown procedures generally available; and reducing Taobao’s timelines for takedowns and issuing penalties for counterfeit sellers.

To read the USTR’s full report on the Notorious Markets List, click here.