Jack Ma’s Alibaba Group is calling out intellectual property agency Hangzhou Wangwei Technology Ltd. as a “malicious” user of the IP protection system, saying it would no longer respond to formal IP or counterfeit complaints lodged by the company.
The Chinese e-commerce giant, which owns the country’s largest online consumer-to-consumer marketplace, Taobao, said it will no longer entertain Hangzhou’s assertion of IP rights over products being sold on Alibaba web sites, and also urged any IP holders to stop engaging Hangzhou’s services as an IP protection agency.
Contact information for Hangzhou Wangwei Technology could not immediately be found.
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Alibaba went on to say that it walks “a fine line” between the interests of brands being sold on its platforms and the merchants who sell them, and in so doing, deals with complaints from rights holders and IP agencies like Hangzhou. But after investigating certain claims for merit, the company said it’s become apparent that Hangzhou is abusing the process.
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Hangzhou purportedly filed thousands of complaints against a range of Alibaba merchants selling across multiple platforms and different types of goods, including women’s apparel, sporting goods, shoes, cosmetics and household appliances. Since 2015, however, the company has withdrawn more than 60 percent of the complaints after merchant appeals.
“The purpose of the [intellectual property rights] system is to protect innovation, yet deliberately abusing the system for malicious or false complaints is unlawful behavior infringing the principles of integrity and justice and will cripple innovation, acting like sand in the gears,” said Chen Wenxuan, an Alibaba lawyer, in a blog post by the company.
Hangzhou is only one of many IP agencies that Alibaba said have “sprung up in recent years” in China to aid companies and brands in managing their rights. While many of the agencies operate legitimately, others have “resorted to grayer measures” in asserting alleged IP rights.
Alibaba also said that it has evidence of possible attempts at price-fixing by Hangzhou, in which the company “may have” worked with certain distributors to lodge additional patent complaints in order to shut down competitors and drive sales away from Alibaba sites.
If Hangzhou continues with its allegedly “malicious” patent complaints, Alibaba said it will consider legal action.
Although Alibaba has been public about its attempts to fight counterfeit goods on its e-commerce platforms, including the launch of a dedicated reporting platform for brands to monitor their goods, Taobao in December was added again to the list of marketplaces known for counterfeit goods by the U.S. Trade Representative Office.
Nonetheless, the company said more than 1 million of its merchants, including major brands like Nike, were dogged last year by “malicious complaints” lobbed by about 5,800 IP companies, leading to a loss of about 107 million yuan ($15.6 million).