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Alibaba founder asks Chinese government to crack down on counterfeits

Alibaba founder Jack Ma has written an open letter to the Chinese government asking it to treat counterfeiting as seriously as it does drunk driving.09 Mar 2017

"Similar to five years ago, if the debates and controversies had never happened around drunk driving, society would not have agreed on the proper legal penalties," Ma said in a post on social media platform Weibo.

The lack of deterrents to creating fake goods is stunting China's innovation, hurting its reputation and threatening the country's future, he said.

The post follows a public appeal by Alibaba in response to criticisms of the fake goods on its platform. In that appeal it said that China's "ambiguous counterfeiting laws" make it hard to build a legal case against counterfeiters and led to a conviction rate of lower than 1%.

That, it said, is "the fundamental reason for the inefficiency in combating counterfeiting and protecting intellectual property".

In his latest post Ma said that "if the penalty for even one fake product manufactured or sold was a seven day prison sentence, the world would look very different, both in terms of intellectual property enforcement and food and drug safety, as well as our ability to foster innovation".

Many countries impose much stricter laws than China, he said.

"For example, in the United States first offenders can be sentenced up to 10 years of imprisonment; repeat offenders more than 20 years. Companies can be fined so heavily that they go bankrupt. Even consumers of counterfeit goods can be subject to detention. This is how the US fostered such a healthy environment for innovation," Ma said.

In China, by comparison, counterfeit manufacturers and sellers do not bear criminal responsibility for counterfeit goods worth less than 50,000 yuan (£5,946), he said.

"The maximum penalty for anything above that amount is seven years. This is a 20-year-old law and a 10-year-old judicial interpretation, severely out-of-date from reality. There is a lot of bark around stopping counterfeits, but no bite," Ma said.

Last year, law enforcement poured resources into anti-counterfeiting but were stymied by lax existing laws, he said.

"The damage fakes have had on China goes well beyond the impact of counterfeits themselves. Fakes wreak havoc on innovation, on hard work, on people with integrity, and hurt the future of the country. Counterfeiting has been rampant in China for decades, especially in rural China. Alibaba today is fighting on the front line of the anti-counterfeiting war," Ma said.

Technology expert Paul Haswell of Pinsent Masons, the law firm behind Out-Law.com said: "Alibaba and its associated platforms are trying to fight the perception that counterfeit goods are sold via Alibaba platforms. This has no credibility unless Alibaba can ensure that those platforms are relatively free of fakes, and fighting the fakes is an uphill battle in the absence of a legal framework which gives adequate protection to copyright holders."

"Alibaba has to do this in order to ensure it has the means to combat the fakes, and the means to protect and enhance its reputation," he said.

Alibaba announced a Big Data Anti-Counterfeiting Alliance in January with international brands including Louis Vuitton, Samsung and Mars, aiming to use technology to fight counterfeiting.

The alliance has around 20 members and will "bring together industry and technical know-how" to help keep fake products off of Alibaba's e-commerce platforms, the company said.

Earlier in January  Alibaba said it was suing two vendors who sold fake Swarovski watches on its Taobao platform in what it said was the first instance of an e-commerce platform taking a counterfeiter to court in China.

Alibaba appointed anti-counterfeiting expert Matthew Bassiur at the end of 2015 to lead a team working with international brands and retail partners, industry associations, government regulators and law enforcement organisations to fight counterfeiting.

Bassiur joined from Pfizer where he oversaw counterfeiting operations, Alibaba said. He previously worked for Apple as senior director for IPR enforcement, and as a federal prosecutor in the computer crime and intellectual property section of the US Department of Justice.