In a press conference this week in Hangzhou, China, Alibaba Group issued a public appeal calling for developments in the law and heavier penalties against individuals involved with counterfeiting.
Alibaba says the act of counterfeiting has been well documented and discussed, but unfortunately the practice is still prevalent. Individuals carrying out these illegal actions have been damaging the manufacturing and business environment, legitimate merchants and consumers, all of whom are victims but must bear the cost.
To date, many of those involved in counterfeiting have escaped sanction, shown by an extremely low conviction rate. Ambiguities in the law have meant that enforcement officers have found it difficult to classify and quantify cases of counterfeiting let alone commence legal proceedings.
Alibaba has witnessed these difficulties first hand. The Group’s Platform Governance Department identified 4,495 leads regarding counterfeiting in 2016. Each involved a value of goods exceeding the statutory minimum of RMB50,000 for criminal investigation. Of these, only 1,184 of the cases were taken on by the relevant authority which ultimately led to just 33 convictions, or 0.7 percent. Furthermore, 37 out of the 47 convicted individuals (78.7 percent) involved in counterfeiting crimes were granted probation.
In an example of what is possible, after a four month-long investigation, public security agents in 12 provinces and cities raided 13 factories and stores in an operation coded Cloud Sword on July 25, 2016, confiscating 150,000 memory disks of a total value of RMB120 million.
The agents arrested 16 people in suspicion of selling counterfeit Kingston and Samsung memory chips on Alibaba’s C2C marketplace Taobao. Cloud Sword Operation demonstrated Alibaba’s relentless efforts in protecting intellectual property through big data technology.
Alibaba is unambiguously committed to continuing its efforts to fight counterfeiting; however, its ability to remove merchants and products is much less productive in the long term without the support of more legally enforceable sanctions.
In its public appeal, Alibaba called for collective efforts in the fight against counterfeiting that include stronger law enforcement measures and harsher penalties for those found to be engaged in this criminal activity.
Jessie Zheng, chief platform governance officer of Alibaba Group, says at the conference today, “The current regulations are no longer able to cope with the need to fight counterfeiting. Criminals can escape any legal consequence leaving law enforcement agents and consumers feeling helpless, and society bearing the damage.”