There has been a mounting concern about the role of e-commerce platforms in the distribution of fake products. For example, two years ago I wrote Does your China factory sell your products on Taobao.com?. And it seems like the situation is getting better for owners of intellectual property rights.
Yesterday I attended an interesting European Chamber seminar that was chaired by Chris Bailey from Rouse, a global agency specializing in IP rights monitoring and protection.
Mr. Bailey informed us of a case where a domestic apparel company sued Taobao and the seller jointly, and won the trial. Since then, Taobao has taken measures to avoid displaying products that infringe intellectual property rights.
Shi Zhongyuan, from the Alibaba group (the mother company of Taobao), listed the steps they have taken in recent years:
- They have set up an online channel to file complaints, in English for SMEs located overseas. They received a total of 23,000 complaints (mostly in Chinese, I guess) in 2012!
- They remove points from sellers that list counterfeit goods on their pages.
- They have created a 200 million RMB fund to compensate buyers.
- They have arranged training for sellers and for domestic brand owners about intellectual property rights.
- They scan new products listed on their platform for obviously suspicious keywords.
- For audio or video products and books, the seller is asked to upload his license.
There was also a speaker from Louis Vuitton who confirmed that Taobao was cooperative in taking down fake products. I admit I was surprised.
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Other interesting notes about online infringement of IP rights in China (unrelated to Taobao):
- It is often difficult to guess which website represents a large organization rather than one guy in his bedroom. But brands need to focus their efforts on catching the big fish.
- Proofs are usually based on (1) payment collection and (2) physical addresses used to ship the goods. Collecting evidence takes months. Then the most effective measure is to file a complaint, in order for the Public Security Bureau (the Chinese police) to launch a raid.
- The Chinese police is cooperative when a case is well documented. But, after a raid, they often grossly underestimate the value of fake products they have found.
- Courier companies are not all helpful. For example, EMS refuses to require the sender to fill out more information or to request the seller’s ID card.
- Chasing infringing companies is 95% thinking & research, and 5% action.
- A speaker from Pandora explained that she often felt she was playing a video game where she hits a rabbit, it disappears, and two others appear on the screen. The websites of sophisticated infringers are very hard to take down.
- Surveys show that about a third of consumers buy copies. But does it mean this is a loss of revenue for brandname owners? Not necessarily, since customers of copies are usually not the same as customers of real branded goods. This is an open debate.
The most important point is the last: “customers of copies are usually not the same as customers of real branded goods” … Louis Vitton is not losing money when somebody buys a cheap knockoff, since that person could never afford to buy the real thing. Conversely, someone who does have the money is not going to buy it online; they’ll go in to a genuine LV store and make sure everybody sees them leaving with something in hand. 99% of the time copies are harmless, and I would even venture to say this kind of copying only serves to strengthen and validate the real brand / genuine article.
Renaud Anjoran says
You are probably right. And when people who buy copies start to have lots of money, they will buy the real stuff.
But, in the case of LV, I would guess it dilutes their brand. In Shenzhen or Hong Kong, I see ladies with LV bags or wallets all the time! When it becomes ubiquitous, it probably hurts the brand. Anyway, they have a pretty big budget to fight copies.