Alibaba acts on malicious claims

Major e-commerce platform Taobao announced in late March that 9 million online merchants have been involved in disputes due to complaints related to just 83 malicious trademarks.

Malicious trademarks are generic terms or commonly used descriptive words such as "slip-on" shoes.

Last year, a man surnamed Wen, who opened a women's shoe shop on Taobao, said he received a complaint from the owner of trademark Yijiaodeng, which literally means "slip-on". The filer of the complaint claimed the "slip-on casual women's shoes" sold at Wen's shop had violated his trademark rights.

Daily sales exceeded 2,500 pairs at Wen's shop, so he paid 20,000 yuan ($2,900) to the trademark owner to avoid the shoes being removed from Taobao because of the trademark infringement allegation.

"It's a protection racket," Wen said. "They even told me that I could beat my competitors by reporting on them."

Commodities with the keyword "holey", for example, totaled more than 2 million on Taobao. The trademark owner of "holey" has complained about 731 apparel products.

Ye Zhifei, director of the intellectual property protection department of Alibaba Group Holding Ltd - Taobao's operator - said the massive amount of meaningless complaints lead to a waste of IP protection resources on the e-commerce platform.

"The cost of malicious trademark registration is low while the influence is vast," Ye said. "They complained about high volume products on Taobao on purpose."

By the end of March, Alibaba had found 83 such malicious trademarks on its Taobao and Tmall platforms, which had made complaints against 110,000 commodities from 15,000 stores. The amount of compensation surpassed 1 million yuan, according to the data released by Alibaba's platform governance department on March 27.

What's worse, nearly 60 million commodities could become the targets of those trademarks and 9 million stores could be involved.

Liu Xiaochun, a law expert at China Youth University of Political Studies, said the existence of malicious trademarks shows loose examination in the registration procedure. He suggested a blacklist of malicious trademarks be set up to better monitor the application and registration of trademarks.

"Removal of commodities causes heavy loss. Although they could come back on the shelves, previous trading records will no longer exist, leading to an indirect negative impact," Liu said.

Du Ying, a professor at the Central University of Finance and Economics' School of Law, called for closer cooperation between the e-commerce platforms and the administrations, in order to establish a quick response mechanism to find and invalidate malicious trademarks, and minimize their impact on market order.

"Exercising trademark rights should not lead to monopoly," Du said. "Monopoly contradicts why the trademark law was made."

Alibaba sued Hangzhou Wangwei Science Technology Co Ltd, an intellectual property complaint agency in February for unfair competition, asking for 1.1 million yuan, marking the first case for the platform to solve the malicious trademark problem.

Since it was founded in 2013, Wangwei has complained about more than 1,000 online stores, but withdrew 60 percent of them when the store owners appealed, according to Alibaba's statistics.

It also showed 17.8 percent of the complaints about counterfeit products from the company were proven to be inaccurate.

"Some people have registered many trademarks but produce no product, which has largely disrupted the market order," said Zhang Mao, director of the State Administration for Industry and Commerce of China. "Malicious registrations will not be approved and existing malicious trademarks should be invalidated."