Alibaba (BABA, Financial), an e-commerce company, was reinstated on the U.S. Trade Representative’s (USTR) list of global marketplaces that carry counterfeit or pirated goods on Wednesday.
The agency is responsible for developing and recommending U.S. trade policy to the president, conducting negotiations and coordinating trade policy within the government through two committees, the Trade Policy Staff Committee and Trade Policy Review Group.
The list, which is released annually, details physical and online markets that are known for fake or stolen products. The list is intended to single out companies and countries that do not attempt to stop counterfeiters. While the list does not set official U.S. policy, it can put pressure on international negotiations and interactions with companies.
In regard to China-based Alibaba, the agency specifically mentions its Taobao shopping platform, citing complaints from rights holders in regard to difficulties in removing counterfeit items from the site.
Alibaba, which was founded in 1999, was removed from the list four years ago after the agency found improvements in the company’s monitoring of counterfeit goods. Last year, however, the USTR said its concerns regarding counterfeit items had increased and that it would be monitoring Alibaba.
In its new report, the agency said attempts to report infringement were “refused inconsistently” and requests to remove items were denied without guidance on how to get results. The agency added that while the steps the company has taken to prevent the issue are promising, the reported level of counterfeiting and piracy are “unacceptably high.”
Management responded to the reinstatement with disappointment and questioned whether the decision was influenced by the current political climate.
“We are far more effective and advanced in [intellectual property rights] protection than when the USTR took us off the list four years ago,” Michael Evans, president of Alibaba Group, said in a statement. “The decision ignores the real work Alibaba has done to protect IP rights holders and assist law enforcement to bring counterfeiters to justice.”
Frank Sands (Trades, Portfolio) is the company’s largest shareholder among the gurus. He holds 0.75% of outstanding shares, which represents 5.8% of his total assets managed. PRIMECAP Management (Trades, Portfolio) and Spiros Segalas (Trades, Portfolio) are second and third. In total, 26 gurus hold positions in Alibaba.
The stock was trading at $86.88 per share on Thursday.
Disclosure: I do not own stock in any companies mentioned in the article.
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