China's Taobao makes big push to shed US "notorious" label

WASHINGTON (Reuters) - China's largest e-commerce company, Alibaba Group, has won support from the U.S. movie industry in its campaign to persuade the Obama administration to drop its Taobao.com website from a U.S. list of "notorious markets" that sell fake goods.

But U.S. software, clothing and shoe manufacturers are urging USTR to keep Taobao on the annual list, which is expected to be released in coming months.

Alibaba, which is partly owned by Yahoo!, has spent the past year reaching out to U.S. groups to address concerns that landed Taobao website on the U.S. Trade Representative's office December 2011 list.

The Motion Picture Association of America, a former critic, is now praising Taobao for "significant progress in 2012 in addressing counterfeiting on its site."

"We are optimistic that Taobao will continue to take the steps necessary to make real and permanent reductions in the availability of counterfeit goods on their e-commerce platform," the movie group said in recent comments to USTR.

Taobao Marketplace is an online shopping site, similar to eBay and Amazon, that brings together buyers and sellers. It is China's largest consumer-oriented e-commerce platform with estimated market share of more than 70 percent.

The website has nearly 500 million registered users, with more than 800 million product listings at any given time. Most of the users are in China, Hong Kong, Taiwan and Macao.

The U.S. Chamber of Commerce has called Taobao "one of the single largest online sources of counterfeits."

However, the Chinese Commerce Ministry strongly objected to Taobao's inclusion on the USTR's 2011 notorious markets list. A ministry spokesman said it did not appear to be based any "conclusive evidence or detailed analysis.

45.2 MILLION PRODUCTS REMOVED

Now, as the U.S. Trade Representative's office gears up for its next notorious market report, Alibaba is making sure its side of the story is heard.

With the help of former USTR General Counsel James Mendenhall, who served in the Republican administration of former U.S. President George W. Bush, Alibaba Vice President John Spelich this month gave the trade office a lengthy account of steps it has taken to address U.S. companies' concerns.

"Far from being a notorious market, Taobao has put in place broad-based measures and severe penalties designed to prevent the sale of infringing goods over its platform," Spelich said in the document.

"Sales of allegedly IPR (Intellectual Property Rights)-infringing goods over the Taobao platform are minimal and Taobao neither invites nor condones such activity."

Spelich said Taobao removed 45.2 million products for alleged copyright or brand violations in the first six months of 2012, including 2.3 million in response to qualified complaints from rights holders.

Neither the Recording Industry Association of America nor the International Intellectual Property Alliance, which represents several U.S. copyright industries, included Taobao in their nominations this month for USTR's notorious markets list.

But the Business Software Alliance, whose members include Microsoft and Adode, said it was not ready to take Taobao off the hook.

"It is still the case that the sale of unauthorized software and (software) keys remain extremely popular and ubiquitous on the website," the software group said.

The American Apparel and Footwear Association, which represents many name-brand manufacturers whose products are routinely counterfeited, took a similar hard line.

Despite new procedures to send complaints to Taobao, U.S. clothing and footwear companies say fake goods are still widely available on the website and that "Taobao is their number one concern on the Internet," the group said.

(Reporting By Doug Palmer; Editing by Xavier Briand)