08.02.15 20:24 Age: 3 yrs
Managing Partner Edward Lehman comments on Alibaba’s USA lawsuit and counterfeit claims.
February 04, 2015, Beijing – Mr. Edward Lehman spoke on CCTV’s Dialogue today concerning issues raised by the recent State Administration of Industry and Commerce (SAIC) regarding counterfeit goods found being sold on Alibaba’s Taobao.com e-commerce platform. A “whitepaper” released by the SAIC revealed the administration’s concern over the situation indicating that only 37.25% of goods surveyed on the portal were found to be authentic goods.
The high levels of counterfeit goods found on China’s e-commerce portal is primarily due to the difficulties of effectively enforcing anti-counterfeiting and Intellectual Property protection Laws on these online platforms. An effective regulation system will involve cooperation between government regulators, the e-commerce platforms, legitimate merchants, and consumers themselves.
l Government must issue and actively enforce clear laws setting forth appropriate penalties for those who manufacture counterfeits, those who sale counterfeits and any third party such as an e-commerce platform, that assists in the sale of counterfeit products.
l E-commerce platforms must enact rules and procedures to identify and shutdown merchants selling counterfeit goods via the online platform. Government penalties on the e-commerce platforms will create the incentive to undertake this obligation, which will be difficult and costly to implement.
l Legitimate businesses must actively monitor the marketplace, including e-commerce platforms to identify counterfeit goods being sold in the real world market and on e-commerce websites, and should actively report counterfeiters to the appropriate government agencies as well as directly to the e-commerce platform, and pursue appropriate legal remedies against counterfeiters.
l Consumers must value legitimate goods over counterfeit goods, and must take action to identify the legitimate goods in the marketplace, and to avoid and report merchants selling counterfeit goods to the e-commerce portal.
The discussion also touched on the recent lawsuit filed against Alibaba in the USA. The USA law suit alleges that Alibaba, Jack Ma, and other management personnel “Issued materially false and misleading statements regarding the soundness of the company’s business operations, the strength of its financial prospects, and concealing substantial ongoing regulatory scrutiny.”
Specifically, the complaint alleges Alibaba management failed to disclose to the public the allegations of counterfeit goods, and unfair and misleading business practices that were the topic of discussions between Alibaba and SAIC personnel two months before Alibaba’s IPO on the New York Stock Exchange.
Alibaba may face potential liability to those who recently purchased Alibaba stock in its IPO in the New York Stock Exchange if the allegations of the lawsuit are found by a USA court to have merit.