Every year the US Trade Representative USTR releases a report on Notorious Markets which identifies places where counterfeit goods are sold around the world to the detriment of US IP owners. For many years this focused on famous physical markets such as Beijing’s Silk Market, various electronics markets in Shenzhen, the Yiwu International Merchandise City in China. Elsewhere around the globe, Notorious Markets can be located from Greenhills in Manila to Petaling in Kuala Lumpur to Dubrovka Market, Moscow.

In recent years the analysis has increased its focus on online marketplaces. The USTR report cites many major pirated copyright content sites, such as movie streamer Fmovies, digital pirated book site Libgen, MPjuices for ripped music, MPGH a site dedicated to gaming hacks as well as Rapidgator, one of the largest file sharing websites in the world. They even mention supporting sites like Israel’s RevenueHits one of the most popular and largest revenue generating advertising networks for piracy sites.

E-commerce marketplaces are also highlighted – specifically those platforms which sell large volumes of counterfeit goods. In February , the Notorious Markets list was released. A quick review of it provides some helpful data for brand owners concerned about the sale of counterfeit goods across Asia. Platforms on the list are those which reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial piracy or counterfeiting.

It is worth adding that the EU Commission publishes something similar. It is expected to report in Q. Its last report was in and it has started public consultations for the next report. There is a great deal of consistency between this and the USTR report published recently.

AliExpress, Alibaba’s international BC sales platform, is recognised as having extensive IP protection tools, but the sheer volume of products listed allows traders mainly drop shippers, to advertise and ship huge volumes of counterfeit goods around the world. Despite Alibaba’s efforts, lax merchant vetting and weak penalties do not act as a deterrent.

DHgate is a BB cross-border e-commerce platform where bulk counterfeit orders are easy to make. DHGate claims to be making improvements but IP owners cite weak seller vetting, ineffective proactive anti-counterfeit processes, and lack of transparency as leading to high volumes of counterfeit sales.

Pinduoduo, a “social commerce” app, is China’s second largest e-commerce platform. IP owners complain of takedowns delays and weak takedown transparency increasingly burdensome and expensive processes, weaker seller vetting, and less cooperation through their Brand Care program as well as little follow up with offline enforcement. Monitoring the platform is difficult for overseas rightsholders as it is only available on mobile and in Chinese language.

Alibaba’s Taobao, the huge domestic China BC platform, may have Alibaba’s best anti-counterfeiting features and processes but is still a major source of counterfeit goods. Recent more stringent rules for takedowns have blocked IP owners’ efforts, yet counterfeits are as pervasive as ever.

WeChat, in China Weixin the instant messaging app, is increasingly a method of selling counterfeit goods, through links to images and purchase information, through livestreams sales, its Moments, Channels feature, and other communication tools. This allows large volumes of counterfeit goods to be sold on the profile pages of Official Accounts, via Mini Programs and through private direct messaging. WeChat provides integrated features such as catalogues, shopping cart, and payment processing. IP owners complain that vetting for Official Accounts and Mini Programs is insufficient, and documentary requirements not implemented. The inability of IP owners to search for IP violations, low penalties and lack of support for offline cases is also cited.

Bukalapak in Indonesia is a platform with large volumes of fake branded products, often openly labelled as “replica”. Bukalapak has improved takedowns and IP owner cooperation, but suffers from weak merchant vetting, merchants being allowed to use multiple accounts or just re-register after being caught, no proactive anti-counterfeiting processes, a slow non-transparent and inefficient notice-and-takedown and limited follow up actions against infringers.

Tokopedia is Indonesia’s biggest e-commerce marketplaces and suffers from freely available counterfeit goods. Recent improvements to the notice-and-takedown system and better IP owner engagement helps, but the problems are still substantial. Takedowns are too slow and insufficiently transparent; merchant vetting is weak and penalties are too low to deter.

Shopee, a leading Southeast Asian SE Asia e-commerce platform, is headquartered in Singapore and NYSE listed but operates semi-independent country sites across the world. In SE Asia, many Shopee sites have poor, slow notice and takedown procedures. Merchant vetting is weak, repeat sellers are common and penalties are non-deterrent. Poor cooperation with Shopee for IP owners on their own investigations into infringing Shopee merchants is a major challenge in some of their country sites.

China’s platforms remain the largest and most serious IP problems for IP owners. That’s no surprise given the high proportion of the worlds’ counterfeits made in China usually estimated at over % of counterfeit goods globally. E-commerce has made sourcing counterfeit goods so much easier whether direct to consumer through AliEpress, or in bulk through AliExpress and DHGate. The logistics and supply chain delivery systems the platforms have funded means Customs have very little chance of stopping these goods as they ship worldwide.

Aliexpress’ new logistics system launched in offers deliveries within days through smart warehouses in China for sellers to pre-stock their products, as well as overseas warehouses to improve delivery times. Rising shipping costs and congestion when shipping by sea, as well as a customer demand for faster shipping times, has led to an increase in the number of deliveries made in smaller quantities by air, especially for smaller lighter items like clothing, luxury goods, jewellery and small electronics which are frequently counterfeited. Aliexpress alone has chartered flights per week between China and Europe. This causes difficulties for Customs inspection efforts, since there are many small packages more frequently sent with many different types of goods to inspect and check on the database – in reality, only a fraction of shipments are flagged for IPR infringement risk and checked by Customs. IP holder demand for more customs activity is at an unprecedented level according to China Customs data; the number of rights mostly trade marks recorded with China Customs has risen to , recorded IP rights – increasing at % p.a.

Recent policy changes by Alibaba and other platforms in China put more burden on rightsholders to ‘prove’ goods sold by sellers are counterfeit. This is partly due to concerns from the platforms about getting sued by their sellers. They may request, for example, where the infringement is not obvious on the page, notarized test purchases to prove the seller actually delivers counterfeit goods. Bad faith counterclaims and fake authorisation documents from sellers are common – and China’s recent e-commerce law leaves rightsholders with no choice but to either allow the listing to be reinstated or engage in litigation or administrative action. Such requirements are simply not feasible for many rightsholders to complete for every single infringement they find on the platforms.

infringement takedown claims are now less effective in China since the takedown only affects the specific copyright asset used and the seller can continue to sell others. The Alibaba Three-Strike, and other penalty points systems in place by other platforms are ineffective, with sellers finding various workarounds such as voluntarily taking down their own listings and relisting to avoid penalties. The requirement on Alibaba platforms for Three Strikes to be within a fixed time period and a yearly reset on penalty points means that sellers are rarely banned. When they are, they can usually just set up a new account under a different ID or change platforms.

It is instructive to see that the biggest platforms outside China are in Indonesia. That is, after all, the largest consumer market in the SE Asian region by a large margin. The USTR does say other countries have online counterfeit goods markets of concern and may have poor e-commerce marketplace regulation. It’s not all bad news. For example, the report cites the Philippines MOU with brand owners and e-commerce platforms to improve notice-and-takedown procedure and with a feedback mechanism to help coordinate actions against online counterfeiting.

Another clear conclusion from the ChinaIndonesia prevalence is how Indonesia e-commerce traders are sourcing counterfeit goods from China either bulk buying from places like DHGate, or small volumes from AliExpress and importing them without any Customs interceptions through the large logistics infrastructure for sale around Indonesia. IP owners report in almost every case that the counterfeit goods found in Indonesia come from China. Given Indonesia’s e-commerce market is now many tens of billions of dollars, it wouldn’t be a surprise if the e-commerce counterfeit market was now over a billion dollars in value in that country. A lot of merchants are making a lot of money from crime, while the authorities take almost no enforcement action.

A clear new e-commerce infringement trend is on the rise in social commerce for counterfeit goods sales. This includes social media platforms with integrated marketplaces e.g., is not identified in the report but is a source of fake goods in the Philippines for example. Another trend is hidden link sales, with which counterfeit sellers advertise a product on social media or image hosting platforms, using links to files with photos and purchase information which may involve contacting a seller on WhatsApp or WeChat and paying through PayPal or TransferWise, for example.

So, what should IP owners do about this? First, they have to engage at local level with the online marketplaces. This is time consuming, joining all the different platforms’ IP owner programs, setting up identification verification systems and notice and takedown processes. Some international Notice Takedown companies can help with this, but rarely can they cover all these platforms due to language, identification and other reasons. Local platform engagement is therefore critical. Marketplaces need to feel more pressure from IP owners to improve their processes, transparency, vetting and cooperation.

Secondly, better regulation is needed. Different countries use different ISP liability rules, so there is a lack of clarity when safe harbour arises in some countries. Indonesia’s laws are a mess of parallel regimes for example. EU FTAs require a full ISP liability regime, but only Vietnam and Singapore in SEA have these trade deals in place. ASEAN has started to look at the issue regionally but with slow progress. Apart from the laws, some enforcement is needed. Two options are available. IP owners must either apply for injunctions when, for example, despite repeated reports widespread and obvious counterfeit availability remains. Alternatively, authorities must pursue administrative remedies – for example over inappropriate vetting – where merchants supply false information, use multiple identities, and run schemes to avoid getting caught.

Online marketplace merchant vetting is too weak worldwide. This means obtaining and making available identifiable information on merchants, just as you would have for a retail business. Far too many merchants hide behind false identities, poor documentary evidence, even fake profiles; and most marketplaces make that behaviour far too easy. Marketplace should turn this into a positive commercial benefit for consumers, that is, verified vendors get preferences to encourage good behaviour.

Many organisations such as the ASEAN EU Business Council call for an ASEAN-wide Memorandum of Understanding on tackling counterfeit and pirated products. Such a MOU would build on those in Thailand and Philippines to provide a code of practice among online marketplaces, brand owners, and governments.

Customs activity needs to improve generally and in certain specific ways. At present, most countries in SE Asia, with the exception of Thailand, do almost nothing to stop huge volumes of counterfeits entering their markets. First, an effective customs procedures in all major markets is needed. Secondly, there need to be specific improvements for small parcels. The ASEAN Low Value Shipment Programme has been suggested as one way to do this, if it could be improved with simpler procedures to stop illicit shipments. China needs to make specific improvements to raise the % of seizure rate for recorded brands as a way to improve its measures of success.

A vital end goal is for online marketplaces to take on more of the burden of proactive monitoring and removal. Tokopedia in Indonesia claims to be developing proactive systems for this. Alibaba trumpets its AI based tools that they say blocks large number of adverts. But this is still not enough given the millions of counterfeit goods available.

Real deterrence from online marketplace penalties is a key missing link. Exclusion of merchants altogether is very rare. Offline criminal prosecutions at the marketplaces’ initiative or with their cooperation needs to increase significantly at present it is so rare as to not to be meaningful at all. The balance always falls in favour of letting the merchant continue to trade and never in favour of stopping counterfeiters.

The commercial challenge is that IP owners are fighting a battle with online marketplaces for resources. Marketplaces want to allow merchants to trade unfettered in any goods despite what they say. IP owners need them to divert some of their huge billions in revenues into meaningful monitoring, vetting, ejection, investigation, and enforcement programs.

This is a problem of scale. Hundreds of thousands or maybe even millions of counterfeits goods are sold daily on e-commerce platforms in Asia. Stopping % of them would mean tens of thousands of cases a day by all the major platforms. Most are not even doing that in a year. Some Shopee sites can take weeks to block just a few adverts!

A lot more work by the IP industry is required. Industry lobbying e.g., by INTA, local Chambers and business groups, publishing reports like those of the EU and USTR, and IP holder engagement with platforms and governments will determine how fast this problem is addressed.