There’s a reason the fight against the production and sale of counterfeit goods has been compared to a seemingly endless game of whack-a-mole. At Alibaba Group, we view our efforts to curtail the availability of counterfeit merchandise on our e-commerce platforms as an ongoing war against a persistent and adaptable foe. While we vigorously work with intellectual property rights holders to combat counterfeits on Alibaba.com and AliExpress, our international B2B and B2C websites, new listings for fakes pop up all too regularly.

This leads to understandable frustration on the part of rights holders who discover cheap knock-offs of their products for sale on our sites. It’s difficult for us to reconcile what rights holders expect—near-perfect compliance and instant takedowns of suspected fakes listings—with what we can realistically deliver under the legal and practical constraints of operating vast, open marketplaces that host thousands of legitimate small-merchant storefronts and millions of product listings.

This does not mean that we put down our hammers and let the moles run rampant. We have an online system in place so companies that believe their rights have been violated can relatively easily file complaints from anywhere in the world and get action.

And we’re committed to continuously improving our capabilities. That’s why Alibaba Group today announced it is strengthening the punishment meted out to IPR offenders through the planned launch of a Three-Strikes-and-You’re-Out enforcement policy for Alibaba.com and AliExpress.com.

With an expected launch date in July, the Three-Strikes system is designed to make justice more swift for blatant, repeat infringements on Alibaba.com and AliExpress. The policy is aimed at sellers of merchandise that is clearly counterfeit and merchants who deliberately create product listings to thwart automated and human detection, for example by posting look-alike, but phony, modified trademarks.

Here’s how the Three-Strike system will work:

	Alibaba.com	AliExpress.com
First Strike	Merchant gets a Warning Letter	Merchant gets a Warning Letter
Second Strike	Merchant is prohibited from further product listings for 7 days; Merchant’s storefront and product listings are removed from search results for 7 days	Removal of all product listings from storefront;Merchant’s storefront and product listings are removed from search results for 7 days
Third Strike	Merchant’s storefront is closed and company is banned from the site	Merchant’s storefront is closed and company is banned from the site

 

To further deter repeat infringement, sellers in receipt of a strike will be prompted to visit a webpage containing educational materials on intellectual property and our intellectual property protection policy. Sellers will be asked to acknowledge their understanding of materials and our policy on the webpage, with a view to promoting understanding and respect of intellectual property rights.

We see the Three-Strikes system as another improvement to our existing intellectual property protection efforts. The sheer size of Alibaba.com and AliExpress demand that our anti-piracy efforts be systematic, automated and massively scalable. Many rights holders have used our AliProtect® system to report and remove suspected counterfeits on our international platforms since its inception in 2010.

This system imposes a progressive disciplinary procedure against members and merchants who repeatedly commit intellectual property infringements. Complaints submitted via AliProtect® against members are automatically recorded and the records are submitted to an automated algorithm for disciplinary actions. Such actions range from issuing warning letters, limitation of website access rights, to termination of website membership.

Although AliProtect® has generally been well received by rights holders, some have reported to us that our progressive disciplinary procedure has not been sufficiently effective in combating repeat infringement. By imposing the new Three Strikes rule, we hope to address these concerns.

Some may ask why we don’t have a One-Strike rule, a policy that calls for any merchant who is caught selling fakes to be tossed off the site immediately. In formulating our Three-Strikes system, we bear in mind that our mission is “to make it easy to do business anywhere,” and that the battle against blatant intellectual property infringement helps to ensure a healthy ecosystem for businesses to prosper.

But we do not believe a One-Strike rule is reasonable within a massive e-commerce environment. We provide an open marketplace for merchants and consumers and give merchants much autonomy and consumers a lot variety. Part of our obligation in providing such an open marketplace is to help educate merchants on the need to respect intellectual property rights and foster their integration with international intellectual property protection standards. A One-Strike rule may indiscriminately kill off merchants who may be careless or ignorant when it comes to these standards. The Three-Strikes system targets blatant and intentional repeat infringers while giving legitimate but ignorant business owners an opportunity to learn to follow the rules. This is why we have built educational materials on intellectual property and our intellectual property protection policy into the penalty process.

The Three-Strikes system demonstrates our commitment in battling counterfeits in partnership with rights holders. We will continue to reach out for feedback and to improve our intellectual property protection system going forward.

(David Ho is an in-house legal counsel for Alibaba Group handling international litigation and intellectual property issues.)