final 2019 annual ipr report - dkf1ato8y5dsg.cloudfront.net

ALIBABA GROUP 2019 GLOBAL

INTELLECTUAL PROPERTY RIGHTS PROTECTION

ANNUAL REPORT

JUNE 2020

Preface

Alibaba is a trusted partner with leading brands around the world, including 80% of the top 100 consumer brands on Forbes’ 2019 List of the World’s Most Valuable Brands which have established digital operations on our business-to-consumer marketplace, Tmall. Brand owners and consumers place tremendous trust in our online marketplaces, and as a leading global technology company Alibaba understands that the protection of intellectual property rights (“IPR”) is an indispensable part of that trust. While Alibaba has built strong relationships with large companies, small and medium-sized enterprises (“SMEs”) and micro-sized merchants are the lifeblood of our platforms, and we diligently work to protect the IPR of companies large and small.

Alibaba also works with dozens of industry associations around the world representing the interests of thousands of rights holders. The positive results of these ongoing relationships are reflected in the public acknowledgments and awards that Alibaba has received. In April of last year, for example, Alibaba received the “Innovator in IP Rights and Technology” award at the Luxury Law Summit in London. The Luxury Law Award recognized, in part, “extraordinary leadership in IP protection.” The Luxury Law Summit brought together over 300 leaders and executives from luxury brands such as Louis Vuitton, Hermes, Gucci, Chanel, Prada, and Tiffany, and luxury conglomerates such as Richemont, Kering and LVMH.1

Alibaba is proud to provide leadership in IPR protection, and throughout 2019 we continued to forge new relationships and strengthen existing relationships in our ongoing effort to build a comprehensive community for the protection of IPR. From consumers to law enforcement, policymakers to academics, industry associations to rights holders, Alibaba’s ongoing outreach and engagement with stakeholders has led to demonstrable results that are reflected in the public recognition that Alibaba received in 2019.

1 “Alibaba Wins Award for Leadership in IP Protection,” April 2, 2019, https://www.alizila.com/alibaba-wins-award-for-leadership-

in-ip-protection/.

“Alibaba has significantly improved its standing within the international community, going from being criticized for its efforts in IP protection to being viewed as a leader and innovator in the field.”

- Fred Mostert, President, Luxury Law Alliance

(Provided for the April 2019 Luxury Law Alliance Summit)

“Alibaba has grabbed the flag on IPR protection and is running with it. We greatly appreciate their close collaboration.”

- Rick Helfenbein, President and CEO,

American Apparel & Footwear Association (April 2019, media statement following Luxury Law Alliance Summit)

Contents

1 Alibaba Group 2019 IPR Protection Statistical Overview 4

2 Alibaba Group 2019 IPR Protection Key Initiatives 8

A. Enhanced Notice and Takedown 8

B. Cutting-Edge Technology for Proactive Removals 8

C. Continued Success Working with Law Enforcement 9

D. Stakeholder Collaboration and Outreach 14

E. Alibaba Anti-Counterfeiting Alliance 16

F. Helping Small Businesses 19

G. Consumers as Stakeholders in IPR Protection 22

3 Conclusion 23

4 Alibaba Group 2019 Intellectual Property Rights Protection Annual Report

Data from 2019 again demonstrated that Alibaba’s model for protecting IPR, through a combination of state-of-the-art technology and deep partnerships with key stakeholders, continued to deliver results.

Continued Rapid Processing of Takedown Requests

Rights Owner IPP Accounts Increased; Service Levels Held Firm

In 2019, for the second consecutive year, 96% of rights holder removal requests submitted through the Intellectual Property Platform (“IPP Platform”) during business days were processed within the first 24 hours. Through the use of technology, Alibaba was able to continue handling takedown requests in rapid fashion notwithstanding a 20% year-over-year increase in IPP Platform account registrations.

Alibaba Group 2019 IPR Protection Statistical Overview

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Cutting-Edge Technology Continued to Fuel Proactive Efforts

Proactive Efforts Showed Continued Effectiveness

Proactive takedowns, where Alibaba removes listings without action by rights holders, remains one of our most powerful enforcement mechanisms. Product intelligence, real-time assessment and interception, semantic recognition algorithms, and algorithms to detect anomalous traffic and merchant behaviors have all been developed and implemented by Alibaba to provide a more full-view of product listings and merchants, and help keep unwanted sellers off of our platforms.

Alibaba continually builds upon its state-of-the-art technology, and each year the number of listings proactively removed by Alibaba is many times greater than the number of listings removed as a result of rights holder submissions.

Importantly, 96% of Alibaba’s proactive removals in both 2018 and 2019 occurred before a single sale took place, protecting consumers and brand owners alike.

Continued Decline in Consumer Complaints

Positive Trends Continue

96%of proactive takedowns were removed before a single sale


Alibaba believes that consumers also can play a vital role in the protection of IPR. For this reason, Alibaba provides functionality on its platforms to allow consumers to easily report listings that they suspect may be counterfeit or otherwise problematic. The number of suspected counterfeit listings removed by Alibaba in response to such consumer reports during 2019 dropped 57% from the previous year, even as the company saw an increase in active users on its platforms. Significantly, this was the third consecutive year that the number of suspected counterfeit listings removed in response to consumer reports declined.

Not only did the number of counterfeit reports from consumers decrease in 2019, but the refund rate on Taobao due to suspected counterfeit products also declined. Taobao transactions receiving consumer counterfeit complaints declined to 1.03 in 10,000. This marked the fifth consecutive yearly decline in this metric.

Continued Success Supporting Offline Criminal Investigations

More than Double the Arrests in 2019

Given that online counterfeiting sales are a reflection of the offline environment, Alibaba has chosen to go beyond its own ecosystem to help identify the physical source of illicit activities. In 2019, Alibaba’s offline investigations team focused on identifying high-value targets in order to achieve the best possible outcomes. Each of the 1,045 IPR-related leads Alibaba provided to law enforcement exceeded the criminal threshold in China. These referrals led to the arrest of 4,125 criminal suspects, which was more than double the number of arrests during the previous

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year. These cases also led to the closure of 2,029 facilities involved in the manufacturing and distribution of illicit goods, which represented a 30% year-over-year increase. The value of the cases was estimated at RMB 8.4 billion ($1.206 billion USD2).

Extensive Collaboration with Stakeholders

Multi-Stakeholder IPR Protection Summits

Building on previous IPR Summits in Geneva, Milan, Seattle and Sydney, in 2019 Alibaba organized IPR Protection Summits in Madrid, London and Rome that focused on SMEs. In holding these events, Alibaba partnered with industry associations, government officials, law enforcement and academia to produce IPR Protection Summits tailored to the needs of SMEs. These events allowed small, medium and micro-sized rights holders to meet, exchange valuable insights on IPR protection and learn about the tools and resources that Alibaba makes available to help grow their businesses and protect their IPR.

2 All USD sums converted from Chinese RMB at a rate of 0.14361.


A. Enhanced Notice and Takedown

The IPP Platform, available at https://ipp.alibabagroup.com/, is where rights holders register accounts and submit takedown requests across Alibaba’s Taobao, Tmall, Tmall Global, 1688.com, Alibaba.com and AliExpress platforms. Through the IPP Platform rights owners can monitor the status and progress of their submissions and manage any follow-up such as responding to merchant appeals. Alibaba has invested heavily in the development and enhancement of the IPP Platform to ensure that it offers rights holders with easy-to-use notice and takedown functionality, including the ability to track the full complaint process.

As a part of Alibaba’s ongoing efforts to increase the efficiency of the IPP Platform, and in order to continue to provide an industry-leading user experience, in 2019 Alibaba enhanced the service capabilities of the IPP Platform to further optimize the processing of notice and takedown requests. By enhancing the IPP Platform interface and implementing upgraded algorithms, Alibaba was able to continue processing 96% of takedown requests submitted through the IPP Platform during business days within 24 hours. The increased efficiency allowed Alibaba to continue this high level of service during 2019 even in the face of a 20% year-over-year increase in IPP Platform account registrations.

B. Cutting-Edge Technology for Proactive Removals

Considering the scale of Alibaba’s e-commerce platforms, effective proactive efforts require cutting-edge technology, and IPR protection continues to be a driver of technological advancement. Alibaba’s IPR technologies such as the dynamic merchant identification system, proactive monitoring and blockchain technology initiatives represent core components of the company’s digital economic governance system. Alibaba’s proactive screening algorithms incorporate a vast number of models and features covering listings and merchants. This technology system also includes an enormous database of online and offline anti-counterfeiting

Alibaba Group 2019 IPR Protection Key Initiatives

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features comprising a data sample 186 times the collection of the National Library of China, and represents Alibaba’s accumulated anti-counterfeiting experiences over the past 20 years.

Alibaba’s technology was recognized by multiple industry awards in China during 2019, including being designated as the “Artificial Intelligence Innovation Star” during the August “China International Artificial Intelligence Summit,” which was hosted by the Xiamen municipal government and jointly directed by the Office of the Central Cyberspace Affairs Commission, the Ministry of Industry and Information Technology and the Ministry of Public Security. In November, technologies employed by Alibaba won further international recognition (in competition with Amazon, IBM and Intel) through an award by the Association for Computing Machinery as “Best Research Application Paper.” In December, Alibaba was awarded the “2020 Innovative Research and Development Award” by the China Association for the Promotion of Industrial Development of the National Development and Reform Commission, and in a ceremony that same month Alibaba’s IPR protection technology was named the “Light of Quality” at the annual event held by the State Administration for Market Regulation.

C. Continued Success Working with Law Enforcement

Alibaba’s offline investigations team oversees a best-in-class program that harnesses technology-enabled capabilities to assist law enforcement and rights holders in targeting counterfeit manufacturing, supply and distribution facilities for offline raids, and counterfeiters for criminal prosecution. In 2019, Alibaba’s offline investigations team continued this work with local police in 31 provinces, regions and municipalities across China as part of our ongoing efforts to crack down on the sale of fake goods.


During the course of 2019, Alibaba expanded its engagement among these 31 provinces, regions and cities to include district and country law enforcement bodies in China in addition to the provincial authorities. As a result, last year Alibaba worked with a total of 439 law enforcement agencies, which represented a 93% year-over-year increase, to carry out offline investigations involving IPR-infringing goods.

In 2019, Alibaba’s offline investigations team delivered its most successful efforts ever. Each of the 1,045 IPR-related leads Alibaba provided to law enforcement bodies met the criminal threshold in China. These referrals led to the arrest of 4,125 criminal suspects, which was more than double the number of arrests during the previous year. The case referrals also led to the closure of 2,029 facilities, which represented a 30% year-over-year increase. The value of the cases was estimated at more than $1.2 billion USD, which was the highest total annual case value to date.

Offline Investigations Case Examples

POLICE IN QINGDAO DISPATCH 100 POLICE OFFICERS

Alibaba cooperated with brand owners MCM, Burberry and Chanel to support the Shandong Public Security Bureau (“PSB”) and the Qingdao city police in a very significant anti-counterfeiting case during 2019. Not only did the effort help safeguard the IPR of those brand owners, but also the IPR of other brands found to be infringed by the illicit operation, including Louis Vuitton, Gucci, North Face, Adidas, Nike, Fila and ANTA. Police in Qingdao dispatched more than 100 officers to conduct intensive raids across three cities in support of the counterfeiting cases being pursued by the PSB. The enforcement actions included raids at six manufacturing and warehouse facilities, which resulted in the seizure of infringing products, product components, and accessories such as Adidas and Nike tags, embroidered labels and metal zippers. The total case value was estimated at nearly $1 million USD.3

3 Case details: http://m.dzwww.com/d/news/19247244.html.

“We increasingly see counterfeiters offering component parts, which are later assembled into counterfeit products, in an effort to evade detection and seizure. No platform works as hard as Alibaba to collaborate with brand owners and stay ahead of counterfeiting trends. We have a true partner in Alibaba and this is yet another example of the good work we’ve achieved with Alibaba.”

- Miller Wang, Brand Protection Director and Legal Counsel, MCM China Inc.

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ALIBABA ASSISTS CHINESE AND UAE POLICE IN HUGE MULTINATIONAL LOUIS VUITTON GOODS CASE

Dubai police had executed over 20 successful raids in recent years against the Middle East’s largest gang specializing in counterfeit luxury bags and clothing yet continued to be vexed by their ongoing criminal counterfeit activity. China’s Ministry of Public Security, Food and Drug-related Crime Investigation Bureau, in collaboration with the Dubai police, and with the assistance of Alibaba, commanded a sweeping two-year operation to support Dubai officials. On July 30, 2019, the multinational effort culminated with the dispatch of nearly 100 police officers from Shanghai and Guangdong. The officers cracked down on the criminal locations involved in the cross-border case to destroy the entire criminal network, including production and supply, distribution and transportation. Nearly $260 million USD was involved in the case, 57 criminal suspects were arrested and 18 criminal dens were destroyed. While the counterfeit goods in question were not sold on Alibaba platforms, the company used its IPR protection governance system to help authorities break the counterfeit operation, and the Dubai Police General Administration expressed their appreciation and thanks to the Chinese authorities and police for their determination in the case and commitment to IPR protection.4

ALIBABA AND VICTORIA’S SECRET SUPPORT POLICE IN WAREHOUSE RAID

Over the course of two years, a husband and wife team built a complete counterfeiting industry spanning manufacturing and sales. In 2019, the couple’s unlawful activity caught the attention of the brand protection team of L Brands and public security authorities. In April of last year, with the help of Alibaba's offline investigations team, Wuxi police successfully raided a 2,000 square meter warehouse in Quanzhou, Fujian province, and seized and dismantled the offline counterfeiting operation involving Victoria’s Secret-branded goods.5

4 Case details: https://www.sohu.com/a/354477811_732438?scm=1002.44003c.fe021c.PC_ARTICLE_REC. 5 Case details: https://www.sohu.com/a/349526698_165533.

“We are incredibly grateful to Alibaba. The company routinely goes beyond the boundaries of its own platform to help rights holders build cases and law enforcement connections. Through Alibaba’s invaluable assistance, we are able to very effectively target and dismantle the actual manufacturers, suppliers and distributors of counterfeit products both in China and abroad.”

- Florence Tam, Director of Criminal Enforcement, Greater China, Louis Vuitton


Law Enforcement Testimonials

“I'd like to, on behalf of the Economic Investigation Bureau of the Ministry of Public Security, express my gratitude to these Internet companies which, represented by Alibaba Group, have always been the most determined partners of the Economic Crime Investigation Bureau of the Ministry of Public Security in cracking down on counterfeiting crimes.”

-- Zhang Feifei, Associate Consultant of the Economic Crime Investigation Bureau, Ministry of Public Security

“Alibaba is the Internet company with the greatest efforts and effectiveness in cracking down on counterfeits. It is also the most pragmatic, sincere, and professional anti-counterfeiting partner of the public security authorities. It provides strong technical assistance for the police to improve the speed, quality, and efficiency of anti-counterfeiting actions, supporting high precision and larger scale of anti-counterfeiting.”

-- Economic Crime Investigation Detachment, Pudong Branch, Shanghai Municipal Public Security Bureau

As is evidenced above, Alibaba works with law enforcement across China and around the world to combat counterfeiting operations. Criminal counterfeit operations are increasingly global in scope as counterfeiters expand their operations and seek efficiencies and specialization throughout the world to enhance their lucrative and illicit activities. Alibaba will continue to go beyond its borders and participate in multinational cooperation with law enforcement agencies seeking to crack down on counterfeit goods.

Civil Litigation

Alibaba has also taken the pioneering step of filing civil lawsuits in China against merchants who misuse our e-commerce platforms to sell counterfeit goods. When first initiated in 2017, the

“We fully support Alibaba’s efforts to continuously strengthen online and offline intellectual property infringement enforcement. Through our close cooperation with law enforcement authorities and Alibaba, we are able to better tackle counterfeiting throughout the entire supply chain. We are focused on winning our customers’ trust, and we’re grateful for great partners like Alibaba who can help us to achieve this goal.”

- Conan Chen, Director, Brand Protection, L Brands

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program included actions filed against counterfeiters of Swarovski, Mars, Bioderma and Adidas brand products. Taobao became the first platform operator in China to bring such civil cases with claims that included breach of the Taobao user agreement, which clearly prohibits the sale of counterfeit goods, and claims for harm to the platform’s reputation.

Taobao was also the first platform in China to successfully obtain a judgment in such a case. Following a lawsuit against a merchant selling counterfeits of a Mars Inc. brand of cat food, the Shanghai Fengxian District People's Court issued a verdict in the first instance on July 20, 2017, holding that the defendant had infringed the legal rights of Taobao by selling counterfeit products on the platform, thus reducing consumer trust and damaging Taobao's public image. The verdict was a first, establishing that sellers can be liable to platforms for the sale of counterfeit goods.

In 2019, civil actions included joint cases with brand owners such as Maotai, Erdos and Peacebird. By the end of the year, Alibaba had filed a total of 86 civil proceedings against sellers of counterfeit products. Often these civil cases follow successful criminal prosecutions. In such cases, rights holders share the criminal judgments with Alibaba, so that we are able to use the judgments in support of our claims for breach of contract and damage to reputation. These types of civil lawsuits by Alibaba discourage the misuse of our e-commerce platforms by driving up costs and increasing the legal risk for counterfeiters. These actions have been an industry-leading effort and we remain committed to this important initiative.

Alibaba has also encouraged legal institutions and social organizations to similarly explore court proceedings to deter counterfeiting. In 2019, the Hangzhou Internet Court handed down an anti-counterfeiting public interest decision for the first time when the Gongshu District prosecutor’s office, supported by Alibaba, brought a public interest case against two sellers of counterfeit diet pills. It was the first anti-counterfeiting public interest case accepted by an Internet Court, and following a September 5 hearing, the court ruled that the two defendants had infringed social and public interests in food consumption by selling fake goods, ordered them to pay


compensation in the amount of RMB 610,000 ($87,602 USD) and issue a public apology. In addition to assisting in the investigation, Alibaba further supported the effort by bringing a civil lawsuit against the defendants in the Hangzhou Internet Court and requesting that the court order the defendants to issue a public apology on Taobao and compensate losses in the amount of RMB 56,000 ($8,181 USD).

D. Stakeholder Collaboration and Outreach Alibaba believes that an indispensable element in IPR protection is advanced collaboration and meaningful dialogue. Each year Alibaba actively works to strengthen relationships with external stakeholders, including government policymakers, law enforcement officials, academics, industry associations and rights holders of all sizes.

Throughout 2019, Alibaba personnel engaged with the European Union Intellectual Property Office (“EUIPO”), including the Observatory’s Expert Groups for Cooperation with Intermediaries and International Cooperation. In September of last year, at the EUIPO offices in Alicante, Spain, Alibaba presented its IPR protection efforts at IP Horizons 5.0, which represents the five leading IP offices from around the world: EUIPO, U.S., China, South Korea and Japan. The event drew 450 IPR specialists and government officials from around the world, including the Executive Director of EUIPO, Director General of WIPO, the Chief Economist for the EU Observatory, the Commission’s Head of Unit, Services and Investment, IP and Public Procurement, and the Commission’s Head of Unit, IP and the Fight Against Counterfeiting.

In June of 2019, for the third consecutive year, Alibaba participated in and co-sponsored the Annual Europol IP Crime Conference held in Malaga, Spain. For the fourth year in a row, Alibaba co-sponsored the 2019 Interpol International Law Enforcement IP Crime Conference which was held in South Africa. These annual conferences convene rights holders, law enforcement and regulatory bodies to explore ways to combat the global trade of IPR-infringing goods such as through the use of open-source intelligence tools to conduct IPR-related online investigations.

In August 2019, Alibaba’s Chief Platform Governance Officer, Jessie Zheng, was invited to share Alibaba’s experience in joint governance against counterfeit goods with 40 countries and regions at the annual IP Week Global Forum hosted by the Singapore Intellectual Property Office.

Alibaba likewise was active in the Asia-Pacific region throughout 2019. Engagement in the region included collaborative events with the Japan Patent Office (“JPO”) and the Korea Intellectual Property Protection Office (“KIPO”) as well as government agencies and associations such as the Japan Ministry of Economy, Trade and Industry (“METI”), Japan External Trade Organization

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(“JETRO”) and International Intellectual Property Protection Forum (“IIPPF”). In January, for example, METI hosted the 7th Meeting of the Japan-China Joint IP Working Group in Tokyo during which Alibaba presented its IPR protection efforts. In both the spring and fall of last year, Alibaba provided practical IPR advice and feedback to rights holders during IP Forums hosted in JETRO’s Shanghai offices. In March of 2019, Alibaba discussed IPR protection measures and strategies at a roundtable event co-arranged by JETRO, IIPPF and METI, and in October Alibaba presented its IPR protection solutions in Osaka at the JPO’s roadshow, “The Power of Intellectual Property.” In Korea, Alibaba exchanged and discussed brand protection initiatives at IPR seminars arranged by KIPO and the Korean Intellectual Property Protection Agency (“KOIPA”). In June of 2019, for the fifth year, Alibaba and the Korea Trade-Investment Promotion Agency (“KOTRA”) co-hosted an IPR training session with Korean rights holders.

In 2019, Alibaba continued its participation in events organized by the U.S. Patent & Trademark Office, “China IP: What Businesses Need to Know” by presenting at events in Durham, North Carolina, Pittsburgh, Pennsylvania and Princeton, New Jersey. At each of these events, Alibaba made its personnel available to a range of U.S. businesses to help make them aware of our IPR-protection resources and practices.

In November of 2019, at the invitation of the Danish Patent & Trademark Office and the Danish Maritime and Commercial High Court, Alibaba presented its IPR protection efforts in Copenhagen, Denmark during IP-Rettens Dag 2019 (‘IPR Day’) Conference, which brought together more than 100 IPR experts from around the world. Keynote speakers included WIPO Director General as well as the acting Chief Justice of the Danish Maritime and Commercial High Court. Alibaba’s collaboration with the Danish government also extends to China where we have, for years, supported the IPR protection of iconic Danish brands through our engagement with the Royal Danish Consulate General in Shanghai.

Alibaba also provides leadership in anti-piracy initiatives. For example, the City of London Police established an Infringing Website List (“IWL”), available at: https://www.iabuk.com/policy/infringing-website-list-iwl, which is a database of websites that have been verified by the police as illegally offering copyrighted content. Through the IWL, companies can better ensure that neither they nor their advertising affiliates mistakenly place ads on pirate sites. Alibaba acts on these law enforcement determinations, and aggressively blacklists advertisements on such pirate sites. This denies illicit actors advertising revenue, and protects consumers by removing advertisements that may lend credibility to the pirate sites.


E. Alibaba Anti-Counterfeiting Alliance (“AACA”) The AACA is a collaborative effort by Alibaba and rights holders and represents the first alliance in the world between a major e-commerce platform and rights holders. Since its founding in 2017, the AACA has rapidly developed from 30 original members to more than 170 rights holders, representing over 500 brands, by the end of 2019. Members include 3M, Adidas, Apple, Beiersdorf, Bioderma, Bose, Canon, Chanel, Colgate-Palmolive, Estee Lauder, Ford, Johnson & Johnson, LEGO, Louis Vuitton, NBC Universal, Nestle, Proctor & Gamble, Pernod Ricard, Swarovski and Unilever, among others, and the dramatic increase in AACA participation speaks volumes about the confidence that members place in Alibaba. A list of AACA members may be found at: https://aaca.alibabagroup.heymeo.net/membership.

Even while experiencing substantial growth, AACA membership has maintained balance, both geographically and across industries. The rights holder members of the AACA come from 17 countries with European brands accounting for 31%, North American brands 30%, Chinese brands 25% and other Asia-Pacific brands 14% of the AACA’s membership.

“We also officially recognise and thank Alibaba for its high level of dedication, cooperation, and professionalism in overall IPR protection.”

- Peter Ratcliffe, Detective Superintendent, City of London Police

(October 2019, in awarding the City of London Police Excellence in IPR Enforcement Award to Alibaba)

(October 2019, in awarding the City of London Police Excellence in IPR Enforcement Award to Alibaba)

“AACA provides a great platform for brand owners to engage and join forces with the Alibaba Group and IPR enforcement authorities. It helps bridge gaps and foster collaborations among relevant parties to tackle IPR.”

- Robin Smith, Vice President and General Counsel, China & Asia Pacific, The LEGO Group

(AACA Autumn Conference, October 2019)

“We are proud to be part of this alliance amongst so many great companies. This gives us the opportunity to continue to offer our water technology to consumers, whilst at the same time stopping infringements more efficiently and offering our expertise and knowledge to further advance the work of the alliance.”

- Astrid Nørgaard Friis, General Counsel, Grundfos

(AACA onboarding ceremony, April 2020)

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The AACA is a forum designed to allow rights holders and Alibaba’s e-commerce platforms to join forces in the fight against counterfeiting. This includes exchanges of information among members regarding current trends in IPR infringement, best practices in enforcement, litigation strategies, and collective feedback on platform practices. The collaboration also includes support for law enforcement and outreach to raise consumer awareness about the damage counterfeit products cause with respect to health, the environment and safety.

To further these joint efforts, AACA members have been organized into 14 industry working groups (“IWGs”), namely: alcohol and tobacco, apparel and footwear, automotive, entertainment and toys, food and beverage, home and electronics, industrial, jewelry and accessories, luxury goods, personal care, pharmaceuticals, publishing and software, smart devices, and sportswear and sports equipment. The 14 IWGs have become industry-leading forums for discussing online enforcement best practices, and each AACA member participates in one or more of the IWGs to advance IPR protection efforts not only on behalf of their brand, but also for the benefit of their entire industry.

To establish an efficient and effective channel for receiving IWG input and suggestions, the AACA Advisory Board receives and discusses significant IPR policy and enforcement-related recommendations on behalf of the alliance as a whole. The AACA Advisory Board has become an effective channel to gather cross-industry input and formulate policy-oriented projects and initiatives. To ensure that each industry’s voice is heard, the chair and vice-chair of each of the 14 IWGs serve as co-rotating representatives to the Advisory Board.

The AACA also launched significant initiatives in 2019 that delivered tangible results in the protection of IPR:


• Enhancing Proactive Measures: A major focus of any online IPR protection effort is the rapid identification and removal of listings offering counterfeit products. The AACA launched an innovative initiative through which AACA members share valuable brand knowledge and help Alibaba to more effectively utilize proactive counterfeit-detection techniques and technologies. Alibaba also provides timely feedback to participating members about the effectiveness of the proactive controls.

• Improving the IPR Protection Experience: Notwithstanding Alibaba’s rapid removal of reported listings, we continually work to enhance our IPR-service capabilities. Through the AACA, members have a forum for sharing suggestions with Alibaba for technological optimization and piloting IPP Platform enhancements such as a system for identifying counter-notice evidence provided in bad faith.

• Developing Offline Cases: Alibaba also coordinates with AACA members on their test purchases, authentication of purchased products, and the pursuit of merchants determined to be selling counterfeits. AACA members identify counterfeit sellers through their enforcement efforts, and Alibaba uses its big data analytics to independently identify potential targets. This two-pronged approach makes for an effective and efficient process for zeroing in on illegitimate sellers and appropriate referral to law enforcement for offline criminal investigation.

• Public Awareness Campaigns: Through collaboration with rights holders, industry groups, NGOs and government authorities, the AACA’s public awareness program focuses on improving the public’s understanding of IPR. By making use of various channels in Alibaba’s ecosystem such as Taobao Headlines, Qianniu Headlines, Taobao University, the Alipay app and the AACA website, the public awareness program reaches both consumers and sellers. Content is conveyed in a variety of formats such as topical articles, Q&As with rights holders and law enforcement, guest articles, live broadcasts, and even a fun and educational quiz game. To date, over eight million consumers have taken part in the Alibaba educational quiz game for IPR, ‘Dada Star,’ which is offered within the Alipay app. Ultimately, the public awareness program seeks to undermine consumer demand for counterfeits by increasing their appreciation for genuine products, cultivating greater social awareness, and promoting sustainable e-commerce practices.

• Legal and Regulatory Dialogue: In 2019, the AACA held a number of working sessions centered around proposed and recently-enacted IPR laws and regulations in China. At these sessions, government and judicial representatives, IPR experts and scholars were invited to participate in the discussions. In April 2019, AACA members

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met with representatives from Yuhang District Court to discuss legal issues related to determining compensation in IPR infringement lawsuits. In May, AACA representatives from the apparel and home electronics IWGs relayed their experiences in matters such as malicious trademark registration and trade name abuse to officials of the State Administration for Market Regulation. In November 2019, AACA representatives discussed administrative law IPR enforcement with representatives from the Shanghai Intellectual Property Administration, and Shanghai Market Regulation Administration.

F. Helping Small Businesses Alibaba’s IPR protection efforts are not limited to globally-recognized companies such as the AACA members mentioned above. SMEs on Alibaba’s e-commerce platforms have tremendous potential. Empowered by Alibaba and the internet, these SMEs rapidly attract consumers with their creative and distinctive products. In order for these innovative brands to realize their full potential, however, they need support for their IPR protection efforts. In 2019, Alibaba continued to offer resources and programs designed to meet the unique needs of SMEs.

In partnership with European industry associations, government bodies and academia, Alibaba produced IPR Protection Summits in 2019 tailored to the needs of SMEs. These events allowed hundreds of SMEs to exchange valuable information and insights into IPR protection and learn about the tools and resources that Alibaba makes available to help grow their businesses and protect their IPR. In January of 2019, Alibaba organized and co-hosted an IPR Protection Summit for SMEs in Madrid with Guardia Civil University. Speakers included the Secretary General of Circulo Fortuny, a non-profit organization for the promotion of Spanish cultural and creative brands, the Director General of the Spanish IP Association, Asociación para la Defensa de la Marca (“ANDEMA”), and the Chinese Ambassador to Spain.

In June of 2019, Alibaba co-hosted an IPR Protection Summit for SMEs at King’s College, London with the United Kingdom Intellectual Property Office (“UK IPO”), City of London Police, the China-Britain Business Council, and the Anti-Counterfeiting Group (“ACG”). Keynote addresses were delivered by the Minister of State for Universities, Science, Research & Innovation, UK Government, and the Commissioner, City of London Police. Other speakers included the Director General of the ACG, Superintendent of the City of London Police, and the Director of the UK IPO as well as brand owner representatives. The IPR Protection Summit was followed by a supplemental session for SMEs seeking practical enforcement tips.


In November, Alibaba organized and held its third European IPR Protection Summit of the year at Luiss University in Rome. The summit was co-hosted with the Italian Patent and Trademark Office, the Italian Ministry of Economic Development, Italian Ministry of Agricultural, Food and Forestry Policies, and the Italian Ministry of Tourism as well as industry associations Confindustria Moda and the Instituto di Centromarca per la Lotta Alla Contraffazione (“INDICAM”). A keynote presentation was delivered by the Under Secretary of State, Italian Ministry of Economic Development, and other speakers and panelists included the Head of Anti-Fraud, Italian Ministry of Agriculture, the General Counsel of Confindustria Moda, the Director General of INDICAM, and representatives from the IACC, Guardia Di Finanza and Luiss University. The Rome IPR Protection Summit likewise was followed by a supplemental session for SMEs where Alibaba answered questions and provided practical tips and feedback to aid their enforcement efforts.

Alibaba is proud to provide leadership in multi-stakeholder events such as the IPR Protection Summits described above. In fact, the summits were a natural extension of the years-long efforts by Alibaba to provide resources designed to contribute to a positive overall experience for SMEs. For example, Alibaba has implemented step-by-step English language instructions for using the IPP Platform, introduced a simple online form with pre-defined fields for takedown requests, undertaken search engine optimization to make it easier for rights holders to find the IPP Platform using popular search engines, offered instructional videos and case studies, and expanded telephone and email support for those needing assistance.

“SMEs are a core part of the UK’s economic engine, and ACG welcomes opportunities to help grow their businesses and protect their IP rights. We are very pleased to be co-hosting this conference and commend Alibaba for taking an industry lead in this area.”

- Phil Lewis, Director General, ACG

(June 2019, in connection with the SME Summit, London)

“We recognize the Alibaba team for their highly cooperative and proactive approach to IPR enforcement. Alibaba has shown a real commitment to protecting rights holders of all sizes, to include SMEs.”

- José Antonio Moreno Campos, Director General, ANDEMA

(April 2019, media statement following Luxury Law Alliance Summit)

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2019 brought further enhancements for SMEs, including:

• The introduction of the SME Support Center with expanded FAQs as well as training and educational resources such as livestream training materials, video guidance and case studies. The enhanced communication resources, including outbound telephone support and email communication resources to help manage IPP Platform account registrations and notice and takedown processing, are also available at the SME Support Center. The SME Support Center is available through the IPP Platform: https://ipp.alibabagroup.com/.

• Alibaba also made available an entirely revamped IPR Protection Handbook, which provides detailed information and step-by-step instructions (with illustrative screen shots) for registering an IPP Platform account, verifying IPR documents, submitting takedown requests and managing the complaint process. The IPR Protection Handbook also has FAQs regarding platform reporting practices. Recognizing that SMEs may not always have the language capabilities of large multinational companies, this valuable resource has been made available in English, French, German, Italian, Spanish, Japanese and Korean. Alibaba’s IPR Protection Handbook likewise is available on the IPP Platform: https://ipp.alibabagroup.com/.

Alibaba’s innovative and collaborative efforts to support SMEs have also given rise to first-of-their-kind programs such as the IACC’s MarketSafe® Expansion (“MSE”) program. In its third year during 2019, the MSE program continued the partnership between the IACC and Alibaba. The IACC enables Good Faith program access and operational support to rights holders and Alibaba provides the necessary funding to enable the IACC to offer the MSE program at no charge. The program is completely free to IACC members and non-members alike. Participants are educated about Alibaba’s IPP Platform and IPR practices, and access to the Good Faith program facilitates reduced evidentiary requirements and faster takedown processing. The MSE program represented a wide range of industries in 2019, and included designated participation by SMEs. More information about the MSE program is available at: https://www.iacc.org/iacc-marketsafe-expansion.


G. Consumers as Stakeholders in IPR Protection Alibaba has hundreds of millions of monthly mobile active users on its retail marketplaces, and we believe this enormous community can be another key stakeholder in the protection of IPR. For example, Alibaba empowers its users to become active members of the IPR-protection community by offering a “report” function that allows consumers to flag listings they believe may be counterfeit or otherwise problematic.

Last year, the number of suspected counterfeit listings removed due to user reports dropped by a remarkable 57% over the previous year. This was the second consecutive year of decline, and was particularly striking given the year-over-year increase in Alibaba’s active users on its retail marketplaces.

In addition, the number of counterfeit refund complaints Taobao received from its consumers in 2019 declined to only 1.03 in 10,000 transactions. In cases where the sale of counterfeit goods is determined to have occurred, the merchant is subjected to platform penalties. Furthermore, Alibaba analyzes those cases to identify useful information that may further improve proactive capabilities. These combined efforts lead to increased levels of consumer trust and satisfaction.

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Alibaba's model for IPR protection features a technology-based approach to notice and takedown that provides rights holders with a combination of easy-to-use functionality and instructional support. In addition, cutting-edge technology is used to proactively intercept problematic listings without required action by rights holders. Given the scale of Alibaba’s e-commerce platforms, it simply would not be possible to deliver the necessary IPR protection without a technology-based approach and Alibaba has invested heavily to position all stakeholders for success. Best practices also include industry-leading offline investigation efforts that go beyond the boundaries of Alibaba platforms to support rights owners and law enforcement in effecting arrests and securing convictions.

Layered over all of these efforts, of course, is multi-stakeholder collaboration and meaningful dialogue. Each year Alibaba actively collaborates with a broad range of stakeholders from around the world, including rights holders, industry associations, government agencies, law enforcement, academia and consumers to form an inclusive and comprehensive community for the protection of IPR. As a result of Alibaba’s investments and broad collaboration, we have created and supported industry-leading initiatives and best practices such as the AACA, IPR Protection Summits, offline criminal investigations and the IACC’s MSE program. These years-long sustained efforts and demonstrated results have proven Alibaba to be a global leader in IPR protection.

Conclusion

final 2019 annual ipr report - dkf1ato8y5dsg.cloudfront.net

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