On Wednesday, the trade authority released its annual Special 301 Report, which assesses trading partners’ efforts at preserving intellectual property rights, alongside the latest findings of its Review of Notorious Markets for Counterfeiting and Piracy. The report pinpoints online and physical markets that perpetrate “substantial” offenses related to trademark counterfeiting and copyright piracy.
Amazon once again figured prominently on the Notorious Markets list, which highlights online and physical venues that the USTR deems to have caused “significant financial losses for U.S. right holders and legitimate businesses, undermine critical U.S. comparative advantages in innovation and creativity to the detriment of American workers, and pose significant risks to consumer health and safety.”
The primary vehicles for those charges are piracy and counterfeiting, and the goal of the list is to motivate private sector and government action against these behaviors.
Following a torrent of criticism in recent seasons for its failures to address rampant counterfeit proliferation across its sites, five of Amazon’s foreign divisions, including amazon.ca, amazon.co.uk, amazon.de, amazon.fr, and amazon.in, got a callout on the list.
The USTR said rights holders that believe their IP is being violated have expressed concern that seller information displayed on the Amazon marketplace is often misleading, making it challenging for consumers and even rights holders themselves to determine who is selling the goods. The document also said Amazon has faced significant complaints that it fails to sufficiently vet sellers on its platforms.
While the tech titan has attempted to tackle the problem through a suite of seller and rights-holder tools and processes, users said the brand protection programs could be “lengthy and burdensome,” stymieing their effect.
Rights holder submissions to USTR demanded that Amazon take additional actions to address concerns, including thoroughly vetting sellers to prevent repeat offenders from creating multiple storefronts on the platform. They also asked that more detailed information about sellers be provided to shoppers and rights holders.
China’s Pinduoduo group buying platform and Alibaba subsidiary and shopping website Taobao also made the list of online market infringers, both for the prevalence of counterfeit goods on their platforms. Thirty-four other global online markets also made the list, ranging from e-commerce sites to streaming platforms.
The American Apparel and Footwear Association (AAFA) released a statement Wednsday praising the USTR for taking its inputs into account in creating the reports.
AAFA president and CEO Steve Lamar thanked USTR Ambassador Robert Lighthizer and his team for providing the trade group with a “regular forum” for sharing perspectives on foreign country practices, as well as physical and online marketplaces.
“We have been particularly focused on drawing attention to the counterfeits that too often plague foreign and domestic third-party marketplaces,” Lamar said, adding that consumers have been forced to learn the hard way that these illegitimate products can cause serious harm—beyond the damage done to brands’ bottom lines.
“They also expose purchasers of everyday basics and essentials to a range of quality concerns and product safety risks,” he said. “This is especially the case during the COVID-19 crisis, when more Americans than ever have made online purchases, which can unknowingly expose them to counterfeits sold on unsafe marketplaces.”
Lamar said he was “sickened” by reports of fake face masks and other personal protective equipment being hawked by predatory sellers. He added that fake apparel and footwear can present similar risks if it violates product safety standards.
The AAFA identified 130 physical marketplaces and eight online marketplaces—including Amazon, a longstanding thorn in the group’s side—as engaging in substantial trademark counterfeiting and copyright piracy.
“It is essential that both domestic and worldwide marketplaces, and the countries that house them, implement effective and proactive measures to safeguard intellectual property to protect consumers, workers, and their families,” Lamar said.
Physical markets across the globe also persist as venues for counterfeit and pirated goods, the USTR said. The 20 markets included in the physical markets list include Argentina, Cambodia, Brazil, China, Ecuador, India, Indonesia, Kyrgyz Republic, Malaysia, Mexico, Paraguay, Peru, the Philippines, Russia, Spain, Thailand, Turkey, Ukraine, United Arab Emirates and Vietnam.
Elsewhere in the report, the USTR identified 10 countries as a part of its Priority Watch List in the Special 301 Report, citing inadequate actions in protecting or enforcing IP rights. The group includes Algeria, Argentina, Chile, China, India, Indonesia, Russia, Saudi Arabia, Ukraine and Venezuela.
A second-tier group of 23 lesser offenders makes up the Watch List, which includes Barbados, Bolivia, Brazil, Canada, Colombia, Dominican Republic, Ecuador, Egypt, Guatemala, Kuwait, Lebanon, Mexico, Pakistan, Paraguay, Peru, Romania, Thailand, Trinidad and Tobago, Turkey, Turkmenistan, the United Arab Emirates, Uzbekistan and Vietnam. USTR also announced that it would be conducting out-of-cycle reviews on Malaysia and Saudi Arabia.
Trading partners that find themselves on either list will need to work closely with the USTR to address their offenses, and over the coming weeks, the organization will review the developments against criteria previously laid out in Special 301 action plans for those countries. Those who fail to address the concerns will face enforcement actions under the Section 301 Trade Act, the World Trade Organization (WTO) or other dispute resolution procedures set forth by other trade agreements.
Basic enforcement actions haven’t been sufficient in deterring bad actors, the organization said, and the current challenges require governments to enact targeted and modernized enforcement tools, like border enhancement measures, expanded privileges for customs authorities to seize and destroy counterfeit goods, punitive measures against those who traffic in counterfeit labels and packaging, and enhanced criminal penalties for particularly serious cases.