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The Notorious Markets List: Top Foreign Sites / Locations for Intellectual Property Rights Infringements

Published onJan 29, 2013
The Notorious Markets List: Top Foreign Sites / Locations for Intellectual Property Rights Infringements

In simple terms, the two major international threats to intellectual property (IP) rights in the U.S. are free stuff and fake stuff. Free stuff is stuff that is taken for free when it costs money. This includes peer-sharing of movies, books, and music. Fake stuff covers knock-offs and counterfeits. These are products sold as name brand products when in fact they are made without the brand company’s approval or expertise.

The problem in the international context is that the U.S. cannot enforce its IP rights in other nations. As with any area of law, nations want to apply their own law in their own nation, not the law of another nation. IP law is no exception. When a knock-off is manufactured in another nation, the U.S. has no jurisdiction until it comes onto U.S. soil, usually through the import process (enforced by the USITC under Section 337). But this is not even equivalent to a slap on the hand. The perpetrators are miles away under the law of another nation. Knock-offs are still being manufactured, and the knock-offs are not always caught by import inspections.

So the Office of the U.S. Trade Representative (USTR) developed another way to help protect against international IP rights infringements. It is the “Out-of-Cycle Review of Notorious Markets” or the Notorious Markets List. This list is issued each year, this year on December 13th, naming top markets that engage in “substantial piracy and counterfeiting.” This year the USTR identified a total of thirty-four markets, seventeen physical markets and seventeen markets operating over the internet including La Salada (Argentina), Nehru Place (India), Silk Market (China), Gougou, Ex.ua, and ThePirateBay.

The point of the list is to incentivize nations where these markets exist to crack down on the infringing activity. Each year markets are removed and new markets are added based on the scale and popularity of the market as the USTR evaluates the potential economic harm to the United States and other intellectual property rights holders. Of tertiary concern is the health, safety, and privacy of consumers. Usually fake products are of lesser quality, and online sites do not properly protect consumer information.

As mentioned before, markets are removed from the Notorious Markets List. When announcing the list for 2012, the USTR representative Ambassador Kirk “applaud[ed] the actions” of markets that cut down on piracy and counterfeit goods, thus earning removal.

Notably, two Chinese websites, Taobao and Sogou, are now off The List. Taobao with 370 million users, implemented a new, quicker and simpler process for reporting fraud, and it eliminated sixty-three million suspected counterfeit products in 2011. Ambassador Kirk mentioned efforts on the part of Taobao to include rights holders in the process of identifying frauds. In further efforts to persuade the USTR of its penitence, Taobao went to Washington and hired the ex-general counsel of the USTR to lobby for removal from the list. The USTR similarly noted and rewarded Sogou’s efforts to decrease the infringing content.

Quiapo, a physical market in the Philippines, is another “positive development” according to the USTR. Quiapo is now one of a number of Filipino markets that have cycled through the list: Greenhills, Divisoria, Makati Cinema Square, Binondo, and Baclaran. Quiapo was known for pirated CDs and DVDs, and is now said to be on the decline. Change was attributed to the collaborative efforts of the Intellectual Property Office of the Philippines all the way down to the local police. The approach involved talking to vendors and explaining the consequences they faced if caught for piracy or for selling counterfeit goods. This departed from the usual approach involving armed raids.

The paradigm of success came recently with Gougou.com, a local search engine used in China. Gougou.com was on the 2012 list issued in December, and by January 2nd, it was shut down. Gougou.com was added to the list due to the “deeplinking” services and cyberlocker facilities offered. Basically, these services facilitated music downloads that infringed copyrights. Xunlei is the Chinese web firm that ran Gougou.com, and some experts speculate that the immediate shut down could be part of a renewed attempt by Xunlei to float on a U.S. stock exchange. Xunlei planned such a move last year, but was thwarted when piracy concerns were raised.

The issue with the Notorious Markets List is that it depends on the impetus and activity of foreign governments and bureaucrats. The USTR creates the list, but that it all. It does not investigate or take action against any market on the list. Still international governments and corporations appear to be responsive to the Notorious Markets List. The question is how big does the carrot need to be to entice change? Even more cynically, how real is the change?

Even though Gougou.com was shut down, there are still other sites with similar names up and running. In fact, the Notorious Markets List notes that Rapidgator.net, a site shut down in the United Kingdom (UK), moved to Russia and is still operating. It is a frustrating situation for businesses protecting their IP rights, but this is at least a step in the right direction by the U.S.

* Lindsey M. Chessum is a second year law student at Wake Forest University School of Law. She has a Bachelor’s in Economics & Business and a Bachelor’s in Philosophy from Westmont College. She spent nearly two years in the stock market industry prior to law school, and upon graduation in 2014, Ms. Chessum plans to return to California to practice business law.


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