Tim Lince

Chinese online marketplace behemoth Alibaba – in collaboration with law enforcement agency partners – has revealed the results on its latest crackdown on offline counterfeiting operations. Leveraging the big data technology that Alibaba has at its fingertips, the figures appear to be impressive – with 417 counterfeit product rackets halted and 332 suspects arrested – but brand owners will be weary of rejoicing until they see tangible results for themselves.

The 2016 ‘Operation Cloud Sword’ was undertaken between April and July as a joint initiative between Alibaba Group and the Zhejiang Office on the Fight against IPR Infringement and Counterfeiting. The operation used intelligence supplied by Alibaba – from activity on its various online marketplaces – to detect and target offline counterfeit production hubs. It led to the closure of 417 counterfeit product rackets and storage facilities across 12 provinces and municipalities across China (including Zhejiang, Guangdong and Fujian), with seized counterfeit goods valued at RMB 1.43 billion ($205,622,259). Those seized goods were of products from 131 brands (including Adidas, Bolon, Converse, Mobil, Nike, Philips and Starbucks) in brand categories such as apparel, footwear, eyewear and electrical appliances. In all, 332 people were arrested.

This follows last year’s inaugural Operation Cloud Sword operation, which led to 300 arrests, the closure of 46 counterfeit production rings and confiscated goods valued at RMB 401 million ($57,660,507).

All of this has been made possible, Alibaba claims, due to the information provided by the big data capabilities the e-commerce giant has been working on for the last few years. For example, for the 2017 operation, Alibaba provided 402 leads to law enforcement. Further insights were given about how Alibaba has been collating this data, led by real-time scanning of listings and the use of image scanning technology.

For the former, Alibaba continues to develop its AI bot which automatically scans each platform – including Taobao and 1688.com – to detect counterfeit goods. The report expands: “All new listings that enter the system each day have to go through the bot’s scanning system, which takes about 30 milliseconds from start to finish for each product listing. The bot analyzes in real-time [...] using hundreds of millions of data points such as product specification, customer reviews and user reviews. The model also analyses relational data associated with the user behavior, merchandise, payment and logistics (receiver/return addresses) to detect anomalies and determine suspected counterfeit goods and high risk merchants for timely interception and disposition. Furthermore, a scoring system was added to the screening process using over 100 attributes, such as storefront, transaction volume, inventory information and addresses. The system would score the merchants from 0 to 100. The higher the score, the riskier the merchant.” The merchant score is now passed on to authorities, Alibaba claims, and is used to determine whether cases “will be further investigated”.

The image scanning technology, meanwhile, has been improved to allow the use of OCR (optical character recognition) technology to detect text on product images. This enables, Alibaba says, the ability to identify when counterfeiters put a high price on the listing but – as a workaround – puts a low price on the product image to indicate to a user that it is a potentially fake product. This same image scanning technology is now able to identify the use of “logos and trademarks” in product images (a positive benefit of uploading brand information to Alibaba’s recently launched IP Joint-Force System)

Reflecting on this latest activity, Alibaba’s head of global intellectual property enforcement, Matthew Bassiur, claimed that “counterfeiters are on notice”, adding: “With big data analytics and other information at our disposal, we will identify the counterfeiters online and assist law enforcement authorities in holding these bad actors accountable for their illicit acts. We are using [this] big data to help authorities identify them, their manufacturing facilities and their distribution locations – attempting to sell counterfeits online may very well lead to their arrest and imprisonment offline.”

In a sign of the growing confidence of its ability to identify fakes, Alibaba announced that it plans to expand its ‘Operation Cloud Sword’ to form the more collaborative ‘Cloud Sword Alliance’. In a statement, the company says that it “not only wants to crack down on counterfeit goods on its platforms, it also wants to crack down on counterfeit goods for the entire industry and society at large”. In doing this, it wants to expand ‘Cloud Sword’ operations to regions further afield and “cut off their sales channels via messaging tools such as QQ and WeChat”.

Clearly Alibaba is hoping its ‘Cloud Sword’ initiative – be it the yearly operation or the newly formed alliance – will be the cornerstone of its anti-counterfeiting outreach to brands. Indeed, at the IACC Spring Conference earlier in the year – amidst the controversy surrounding its membership – Alibaba CEO Michael Evans decried the fight against fakes as “war – and we plan to win by working with all of you”. For the trademark community, there appear to be positives to take away here – but until tangible benefits are felt by a majority of enforcement teams, these operations may still feel like a drop in the ocean.

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