USTR Lists AliExpress, WeChat on Notorious Markets List
On February 17, 2022, the Office of the U.S. Trade Representative (USTR) released its 2021 Review of Notorious Markets for Counterfeiting and Piracy, also known as the Notorious Markets List (NML). For the first time, AliExpress and the WeChat e-commerce ecosystem were included on the list, along with four other Chinese online marketplaces and nine physical marketplaces. Although inclusion on the list does not result in enforcement actions or penalties, the list provides insight into the USTR’s policies and priorities and is intended to encourage governments and private sector actors to combat intellectual property piracy.
Background
The NML is an annual publication highlighting online and physical markets that reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial intellectual property piracy or counterfeiting.1 The list is compiled after the USTR solicits comments from U.S. industry groups.2 This year’s list identifies 42 online markets and 35 physical markets that are reported to engage in or facilitate trademark counterfeiting or copyright piracy around the world.3
Besides identification of markets that facilitate piracy, the NML also has an Issue Focus, which highlights an issue related to substantial piracy and counterfeiting.4 Described as an extension of the administration’s “worker-centric trade policy,” this year’s Issue Focus was on poor working conditions in the counterfeit goods supply chain.5 This Issue Focus also included a discussion of forced labor and child labor.6
Chinese Markets
The NML specifically mentions China in the Issue Focus, saying that manufacturing facilities of counterfeit goods often have “unsafe working conditions that do not adhere to local or international environmental, health, and safety standards.”7 The Issue Focus adds that Chinese manufacturers know their production is illegal, and that they attempt to conceal their manufacturing processes from authorities.8
Turning to specific markets, although the USTR lauds Alibaba for having “some of the best anti-counterfeiting processes and systems in the e-commerce industry,” it includes AliExpress on the list for a “significant increase” in the number of counterfeit goods offered for sale on the e-commerce platform.9 In addition, the NML notes that sellers’ business licenses are not sufficiently vetted to ensure that they are not selling counterfeit goods, which leads to limited deterrence for future counterfeiters.10 After its designation, Alibaba stated it was working with government agencies to address concerns about intellectual property across its platforms.11
As for WeChat, the NML is particularly concerned with the integration between WeChat’s social media platform and e-commerce platform, which allows counterfeiters to advertise and direct customers to their counterfeited products.12 The NML also discusses limited verification of business licenses for would-be counterfeiters and limited monitoring and punishment for sellers of counterfeit goods.13 WeChat’s parent company, Tencent, “strongly disagreed” with the decision, and promised to “work collaboratively to resolve the matter.”14
Besides these two new inclusions, the NML also discusses Chinese web platforms Baidu Wangpan, DHgate, Pinduoduo, and Taobao, all four of which were included in previous versions of the NML. The NML also includes physical markets Asia-Pacific Xinyang Clothing & Gifts Plaza, Chenghai District, Huaqiangbei Electronics Malls, Kindo and Zhanxi Garment Wholesale Markets, Luohu Market, Silk Market, Wu’ai Market, and Yiwu International Merchandise City.15
As previously mentioned, inclusion on the NML does not result in any penalties or enforcement actions. However, businesses included may face a reputational hit. Meanwhile, this year’s Issue Focus confirms that forced labor remains a priority for the administration.
1 Office of the U.S. Trade Representative, 2021 Review of Notorious Markets for Counterfeiting and Piracy (Feb. 17, 2022), 1 https://ustr.gov/sites/default/files/IssueAreas/IP/2021 Notorious Markets List.pdf.
3 USTR Releases 2021 Review of Notorious Markets for Counterfeiting and Piracy¸ Office of the U.S. Trade Representative, Feb. 17, 2022, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2022/february/ustr-releases-2021-review-notorious-markets-counterfeiting-and-piracy.
4 Office of the U.S. Trade Representative, 2021 Review of Notorious Markets for Counterfeiting and Piracy (Feb. 17, 2022), 3, fn 3 https://ustr.gov/sites/default/files/IssueAreas/IP/2021 Notorious Markets List.pdf.
11 Reuters, US Adds Sites Operated by Tencent and Alibaba to ‘Notorious Markets’ List (Feb. 20, 2022), https://www.cnn.com/2022/02/20/business/alibaba-tencent-notorious-markets/index.html.
12 Office of the U.S. Trade Representative, 2021 Review of Notorious Markets for Counterfeiting and Piracy (Feb. 17, 2022), 35 https://ustr.gov/sites/default/files/IssueAreas/IP/2021 Notorious Markets List.pdf.
14 Reuters, US Adds Sites Operated by Tencent and Alibaba to ‘Notorious Markets’ List (Feb. 20, 2022), https://www.cnn.com/2022/02/20/business/alibaba-tencent-notorious-markets/index.html.
15 Office of the U.S. Trade Representative, 2021 Review of Notorious Markets for Counterfeiting and Piracy (Feb. 17, 2022) https://ustr.gov/sites/default/files/IssueAreas/IP/2021 Notorious Markets List.pdf.
