Tim Lince

Following a raft of coverage on Alibaba Group’s unprecedented decision to sue two vendors that sold fake watches on its Taobao marketplace platform, Swarovski has released a statement praising the move. The online giant has pledged more such actions but the response hasn’t all been positive, with e-commerce rival JD.com telling World Trademark Review that counterfeiters will continue to “flock” to Alibaba platforms and accusing it of “lax IP enforcement”.

Alibaba Group announced on Wednesday that it has filed a lawsuit with Shenzhen Longgang District People's Court against two Taobao sellers accused of trading in fake Swarovski watches. In its official statement, Alibaba described how one of the merchants was identified; namely that it used “big-data technology’ to detect the listing of suspected fake Swarovski watches, then initiated its ‘test-buy purchase program” to purchase the products and, in partnership with the rights holder, confirmed that they were indeed counterfeit. These leads led to Shenzhen Luohu District police raiding the seller last August and confiscating over 125 counterfeit Swarovski watches valued at nearly RMB2 million ($290,625).

Responding to the news that Alibaba subsequently planned to undertake litigation against the selling of fake versions of its products, Swarovski voiced strong support for the partnership. “We take counterfeiting seriously and we have been steadily increasing our anti-counterfeiting efforts worldwide,” a spokesperson said. “Swarovski has cooperated with Alibaba on cases against sellers who are offering Swarovski counterfeits on Alibaba platforms, and applauds any steps Alibaba takes to discourage counterfeiters from selling on Alibaba platforms.”

This will be the first time an e-commerce platform has taken litigation action against counterfeiters – and the company claims it “won’t be the last”. Talking to World Trademark Review, an Alibaba spokesperson spoke about last year’s anti-counterfeiting operations, dubbed ‘Operation Cloud Sword’, which has been expanded into the ‘Cloud Sword Alliance’. “[That operation] provided evidence to the legal authorities, and they raided their goods factories and operations facilities to put hundreds of these fraudsters behind bars,” the spokesperson explained. “In this lawsuit, we are working through the local civil court system to further press our fight against counterfeiters. It will be the first of many civil lawsuits coming against counterfeiters and it comes on top of criminal charges already filed by local authorities against these same individuals. These potent examples show two things: first, we are dead serious about fighting the counterfeit scourge; and second, we are using all available tools to combat it."

The move has been widely reported, with outlets often critical of Alibaba voicing their hope that this may be the start of a trend. Bloomberg, for example, published an editorial headlined “Kudos to Alibaba”, stating the company “needs to hire more lawyers” because suing counterfeiters is “exactly the kind of action Alibaba needs to take more often”. Chinese outlet the Global Times said Alibaba Group “deserves a big applause” for the move, and that it “shows it is finally serious about cracking down on fake goods and is taking a necessary step to win the confidence of customers and brand owners”. All-in-all, it has been a successful move from a public relations perspective following negative headlines last month when the USTR decided to return Taobao to its Notorious Markets list.

However, Alibaba’s main e-commerce rival in China – JD.com – has voiced scepticism about whether enough is being done. Talking to World Trademark Review, a JD.com spokesperson argued that the fact so many counterfeiters continue to use Alibaba platforms is indicative of how unlikely they believe they will be caught or punished. “Counterfeiters flock to sites with lax IP enforcement,” the spokesperson added. “If you were a counterfeiter, would you list on JD.com, which has a 1-strike rule and large financial penalties, or a site with a three or four strike rule? You can only remove hundreds of millions of counterfeits from your site if your site has hundreds of millions of counterfeits. We don't."

JD.com is not shy in criticising the level of counterfeits on its rival’s platforms (indeed, its CEO did so last May in a WTR exclusive op-ed). The tension between the two is unlikely to go away any time soon, so the prospect of these Chinese e-commerce giants burying the hatchet to partner in the fight against the common enemy – counterfeiters – remains remote. However, brand owners would likely welcome a united front.

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