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Alibaba Group Sued Again Over Alleged Counterfeits

The mainstream press was buzzing this week over the lawsuit launched by Kering, the parent company for luxury brands Gucci, Yves Saint Laurent and Bottega Veneta. Kering accused Alibaba Group, a Chinese ecommerce company, for encouraging counterfeiting of its products.

Kering's lawsuit states that Alibaba “provided the marketplace advertising and other essential services necessary for counterfeiters to sell their counterfeit products to customers in the United States.”

It's no secret that 70% of all counterfeit goods seized globally come from China.  If it's a high-end brand, the chances are high that you can buy a knockoff from China through Alibaba. Don't take my word for it. Go ahead and search Alibaba for yourself; it's amazing what you can find. For example, I found a Foscarini pendant light for $110 with free shipping included. The normal retail price for the authentic product is $1200.00. Considering these vastly different price points, it is no surprise that Kering wants to crack down on counterfeit goods that are edging into their profits.

Alibaba reports that they are taking steps to combat counterfeiting such as:

  1. Removing products that are in violation of copyrights. Prior to their IPO, Alibaba said they removed 100 million potentially counterfeit products, providing an indication of the size of the problem. Alibaba clearly removed these products for the IPO.
  2. Placing proprietary QR Codes on products. This solution comes from Israeli startup Visualead. This proprietary QR code requires Alibaba's Taobao mobile app to scan the one time code. The code can only be scanned once to test the authenticity; subsequent scans would presumably indicate a copy. Why can't a counterfeiter simply copy the QR code and claim the item is authentic and that it was scanned by accident? What can Alibaba or the end user do?

It's unclear if the actions they have taken so far are having an impact. Kering clearly doesn't think so. This raises some interesting questions:

  1. Does Alibaba actively seek to find copyright infringing products on their platform and remove them? I would guess the answer is yes, if it's blatantly obvious. On the other hand, they don't want to alienate their clients, so there is no real incentive to dig too deep. I would also guess that infringers just have to make it a little apparent. My quick search shows that it's fairly clear what they're doing.
  2. Is it up to brand owners like Kering to identify counterfeit products and to make Alibaba aware so they can delist them? Given the current state of affairs in China, the answer is YES, but it's not working that well. Counterfeiters likely just relist a product so that it's not as obvious.
  3. Can QR codes solve this problem? QR codes are easily copied. Even if a mobile client detects a copy, Alibaba won't know if it's a counterfeit or not. It can be the real item scanned more than once, so it's unclear how this helps.

There are clearly several problems with Alibaba's system. But what is the solution? Here is where TrustPoint Innovation Innovation's BLACKSEAL can help. So how is TrustPoint Innovation's BLACKSEAL different?

BLACKSEAL uses NFC tags, where a fingerprint of the hardware is cryptographically signed so that any attempts to copy would be detected as a true counterfeit. In addition, BLACKSEAL analytics give brand owners a window into clone attempts, including the location of the clone attempts. Check it out to see how one can detect counterfeits, and how it provides a promising future to help companies like Kering protect the authenticity of their brands.

About this Blog

The TrustPoint Innovation Blog covers security industry topics relating to Certificates, Elliptic Curve Cryptography (ECC), Machine-to-Machine (M2M) Communication, Near Field Communication (NFC), Vehicle-to-Vehicle (V2V) Communication, and more.

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