Tim Lince

(This article has been updated – the new information is italicised below)

A new marketplace platform, Paytm Mall, launched in India last month and has lofty expansion plans as it bids to become a major player in the Indian consumer shopping space. However, the marketplace – which has been financially backed by Alibaba Group to the tune of around $170 million – appears to have a number of IP infringing listings and currently no dedicated mechanism in place to report them.

Paytm was originally founded in 2010 as a prepaid mobile recharge website. In the following years the company grew rapidly, primarily due to the launch of Paytm Wallet, which quickly became India’s largest mobile payment platform and today has over 150 million wallets and 75 million app downloads. Today, the company has 13,000 employees and is valued at around USD$5 billion – with Alibaba Group reportedly investing around $575 million in 2015.

The latest major development for Paytm is the launch of its e-commerce arm, Paytm Mall. Announced at the end of last month, Paytm Mall is a wholly separate business entity from Paytm (a requirement following new government regulations in India) and Alibaba has plowed $177 million into it in a bid to help the platform challenge the country’s current e-commerce leaders, Flipkart and Amazon. Media coverage of the launch has characterised it as Alibaba’s first major push into India – and it isn’t hard to see why the company would be interested: India’s online population is growing at an unprecedented rate and online sales are predicted to reach nearly $50 billion by 2020.

The new Paytm Mall builds on the e-commerce unit of Paytm’s mobile payment platform, and claims to already have 1.4 million sellers and 68 million listings – with ambitious plans to “add close to a billion products from across the globe […] before the festive season this year” (for context, rivals Amazon has around 500 million products on its platform in India, while Flipkart has around 50 million). The platform is structured under a number of specific categories (currently electronics, fashion, groceries and FMCG) and “brand authorised stores” (such as this page on “Made in India brands”). There is also a bazaar section which focuses on fashion, home furnishing and products from independent sellers. The entire platform is structured similarly to Alibaba’s T-Mall, with sellers needing to be approved before they can add listings. “Sellers […] will have to pass stringent requirements in terms of supply, inventory and logistics,” confirmed Saurabh Vashishtha, vice president at Paytm.

How strict that requirement will be is unconfirmed right now. However, the marketplace is already full of branded products sold by unverified sellers – and some at suspiciously cheap prices. This Burberry clutch bag, for example, is being sold at RS 3,199 ($48), while a range of Louis Vuitton and Hermes wallets are being sold for around RS 999 ($15). But what will be of concern for rights holders is that there is not an obvious way to report IP infringing listings. When asked for information on Paytm Mall’s takedown procedure, Paytm’s official spokesperson told World Trademark Review that the company “does not have any input currently on this query”. Not stopping there, we called Paytm’s official helpline and was told that the reporting of possible counterfeits should go through the same channel as other customer queries. More specifically, the company representative explained that rights holders would need to send an email (to care@paytm.com) with a link to the listing, a screenshot of the listing and a full explanation of the issue at hand.

A major online marketplace not implementing an anti-counterfeiting mechanism is a rare occurrence nowadays. It is even more surprising due to Alibaba’s involvement, a company which has been pushing its anti-counterfeiting credentials all year. Indeed, Rob Holmes, CEO at IPCybercrime.com, tells World Trademark Review that it is unusual that Alibaba hasn’t stepped in. “My first question is why don't they have a system built for launch? For me, it's more peculiar than anything else because Alibaba has this capability already, why didn't it bake its infrastructure into a marketplace it has invested so heavily in from the beginning?”

In the meantime, until an effective system is in place, Holmes says it is critical that brand owners pay close attention to Paytm Mall. “While there may be no effective enforcement mechanism yet, rights holders should at least be ready to advise them when they're ready to come to the table,” he adds. “Associations such as the IACC have roundtables with these marketplace platforms to share feedback and criticism – and once enough brands call attention to Paytm Mall’s lack of proper enforcement measures, they will have to come to the table. The sooner that brands start looking at this, the more likely it is they'll start putting this mechanism in place. Ultimately, they're ready to do it – all well-financed companies are – it's just a matter of time and pressure."

If Paytm Mall achieves its predicted growth and boasts a billion product listings by the end of the year, it will be the biggest e-commerce platform in India. We’ve written in the magazine before that a “counterfeiting boom threatens India’s online sales bonanza” – and if Paytm Mall becomes the new standard-bearer in the country, it must have an effective IP infringement reporting system in place. While its verification system for sellers is a positive move, it will not filter out all infringing goods. If a dedicated reporting system is not implemented, backer Alibaba should consider stepping in and adding Paytm Mall to its already well-established rights protection platform.

Update 1: Shortly after the publication of this article, Paytm's official spokesperson (who previously declined to offer input for this article) got in touch with the following information:

"Paytm Mall has strict processes and policies in place for ensuring unauthorised or fake products from being sold on the platform. Checks are in place at different stages including:

  1. Paytm Mall already identifies products that are prone to fakes and pre-emptively blocks any seller from adding these products until they furnish proof that they are authorised sellers of the product. Here are two links to our blog wherein we communicate the same to the merchants (example one, example two).
  2. Consumers can also raise complaints or concerns (along with return requests) through the 'order history section on the app' in case they believe that a non-authentic product has been shipped to them.
  3. Brands can also raise complaint in case they find anything suspicious by writing to PaytmMall. As soon as a complaint is received an audit process gets auto-triggered and we take swift action against sellers selling counterfeits. In case the product is found to be non-genuine, action is taken that includes delisting such sellers along with their entire listings and initiating legal proceedings against the sellers."

Update 2: Less than 10 days after the publication of this article, Paytm Mall introduced a reporting function to each product listing on the site. Every listing (an example) now has a 'Report this product' link near the top of the page, which gives rights holders the ability to flag IP infringing items to Paytm Mall's support team.

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