Alibaba Cracks Down On Counterfeits

Alibaba is taking more measures to crack down counterfeiters using its eCommerce site Taobao weeks after the site was blacklisted by the Office of the U.S. Trade Representative (USTR) after four years of being left off. Alibaba is fighting against a growing reputation of being a major source of fake goods.

The Chinese retail giant has sued two vendors that it said used Taobao as a platform to sell fake Swarovski watches. The lawsuit is reportedly the first legal action taken by an eCommerce site in China against sellers of counterfeit goods. In a statement Alibaba made on Wednesday, the company is seeking 1.4 million yuan ($203,000) for “violation of contract and goodwill” in a case filed with the Shenzhen Longgang District People’s Court.

Zheng Junfang, chief platform governance officer of Alibaba Group, said in the statement, “We want to mete out to counterfeiters the punishment they deserve in order to protect brand owners. We will bring the full force of the law to bear on these counterfeiters so as to deter others from engaging in this crime wherever they are.”

Alibaba said it used a combination of “mystery shopping” — clandestine purchases of merchandise suspected of being counterfeit — and big data to identify counterfeit Swarovski products and locate the sellers. Alibaba intends to take similar legal action against other vendors selling counterfeits.

In the report, the USTR wrote, “The eCommerce platform is an important concern due to the large volume of allegedly counterfeit and pirated goods available and the challenges right holders experience in removing and preventing illicit sales and offers of such goods.”

A few days before the USTR blacklisting, Alibaba said it was leveraging its cloud computing capabilities to fight the growing threat of pirates and counterfeiters. The Chinese eCommerce giant said that its own Operation “Cloud Sword” led to the arrest of more than 300 counterfeit gang member suspects in 164 investigations. Unsurprisingly, Alibaba is unhappy with the USTR decision to blacklist Taobao.