Taobao wins in landmark online counterfeit case in China

Taobao won an online landmark counterfeiting case against a vendor selling fake Royal Canin cat food on the huge online market. The court ruled that the defendant, a man named Yao, damaged the reputation of Taobao and therefore should pay compensation in the amount of 120.000 Yuan within 10 days. Taobao is also asking the court to order the defendant to publish a written apology in several prominent print and web publications for a week.

This was the first ruling of its kind in China, exemplifying the country’s efforts to fight counterfeiting which has cast a shadow over China’s thriving online shopping sector.

Established in 2003, Taobao has more than 500 Mio. registered users and over 60 Mio. visitors each day.

According to the court Yao started producing and selling the fake cat food in 2015. The online platform and Mars, the company that owns Royal Canin and miscellaneous other pet food brands, started suspecting Yao selling fake pet food, which was then later confirmed by lab tests that were conducted. While the QR Code, the verification code and the packaging of the pet food were found to be identical with the original provided by Mars Inc., the ingredients in the fake product were different. Taobao later submitted the evidence to the police and assisted them in the investigation. Yao was then arrested on October 12, 2016 by the police and Taobao filed a lawsuit against him.

According to the Alibaba Group (parent company of Taobao) they loose about five customers for every fake product that is sold on Taobao. For this reason Jack Ma, CEO of Alibaba, is spending 1 Bio. Yuan each year to run a specialized team of 2.000 people who work on detecting and eliminating fake products and restore Taobaos reputation. In 2016 alone, the team helped catch a total of 880 suspects.

This was the second civil action lodged by Alibaba this year in its efforts to curb the sale of counterfeit products on its platforms. In early January this year, Alibaba sued two vendors for selling counterfeit Swarovski watches, seeking RMB 1,4 Mio. for the violation of the contract and goodwill.

The Alibaba group is anxious to restore their reputation, after the USTR (United States Trade Representative) added Taobao back to the black list for the world’s most notorious markets for counterfeit goods in December of 2016. For this reason they actively fight against counterfeit products on the online platform. Although they are not eager to close the websites of sellers who provide original products through not licensed distribution channels. Removing fake products is not an easy task, as the number is rapidly increasing. As a measure Alibaba has recently implemented QR Codes for buyers to be used to scan and determine a product’s authenticity. Each code is unique to each product, and scanning the code “burns” it so it cannot be used more than once.

Because of the complexity and the possibility of problems with the language it is necessary to contact a specialist like us to remove counterfeits and close online shops.