Why Alibaba’s 3 strike rule will fail and not work

I can tell you that Alibaba’s new 3 strike rule, while good in its intent, will not work.

The last business that I was running I had to deal with counterfeiters on a daily bases. Not only did factories in China sell my copyrights, but they also sold counterfeit products that I sold with a licence from the trademark holder. What happened every time I reported a counterfeit on Amazon? Sellers were usually banned fast, but they would be back within a few days. Why? Because there are 1.5 billion identity’s in China alone.

All that time dealing with counterfeiters and facing their tactics was like a one man war. And I got no medal just like Rambo. Brand owners never thanked me, and probably never knew in the first place, Amazon never thanked me for policing their site. That is when I realized it is up to the brand owners to protect their IP, and I started Stigma Search.

Most of the counterfeiters were from China/Hong Kong. When a seller in the US is banned, it is a lot harder to get back on sites like Amazon. This is because it is easier to identify US users by SS numbers and you will need a new number each time you register. Non US sellers never had to report such info. All Amazon had was a name and a ip address. The name does not even have to be real.

So does Alibaba have a edge when dealing with counterfeiters because it is a Chinese company? No. The same thing applies for them as did with Amazon. It is impossible when you have such a large population. Here is how the 3 strike rule works:

alibaba 3 strike rule

Why not a 1 strike system:

A One-Strike rule may indiscriminately kill off merchants who may be careless or ignorant when it comes to these standards. The Three-Strikes system targets blatant and intentional repeat infringers while giving legitimate but ignorant business owners an opportunity to learn to follow the rules,”Alibaba legal counsel David Ho explains

Alibaba and its network’s #1 problem is counterfeit products. You can read my post on Alibaba here, where I ask just how dependent are they on counterfeit products, and how easy it is to find a counterfeit product on there. From my post:

Last year the site removed 87 million listings suspected of copyright infringement. The same year the company said they had around 800 million total listings. That makes 87 million around 10% of the total listings.

What do you think? Leave a comment on if you think this new 3 strike rule will work or not.



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