1 November 8, 2020 Mr. Daniel Lee Assistant US Trade Representative

November 8, 2020 Mr. Daniel Lee Assistant U.S. Trade Representative for Innovation and Intellectual Property (Acting) Office of the United States Trade Representative 600 17th Street NW Washington, D.C. 20508 RE: 2020 Special 301 Out-of-Cycle Review of Notorious Markets Docket Number: USTR-2020-0035 Submitted electronically at: www.regulations.gov Dear Mr. Lee: On behalf of the member companies of the American Apparel & Footwear Association (AAFA), we appreciate this opportunity to submit comments to the United States Trade Representative (USTR) as part of its 2020 Special 301 Out-of-Cycle Review of Notorious Markets. We applaud USTR’s unwavering commitment to the protection of American intellectual property rights. AAFA is the national trade association representing apparel, footwear, travel goods, and other sewn products companies, and their suppliers, which compete in the global market. Representing more than 1,000 world famous name brands, AAFA is the trusted public policy and political voice of the apparel and footwear industry, its management and shareholders, its nearly four million U.S. workers, and its contribution of more than $400 billion in annual U.S. retail sales. AAFA’s Brand Protection Council (BPC) vigorously pursues brand protection efforts, with a focus on the global war against counterfeit apparel, footwear, accessories, and other supplier products. This committee has focused its attention on the proliferation of counterfeit goods found on online platforms and in physical markets. The recommendations and issues identified in this submission come directly from input provided by the BPC. Our comments also reflect AAFA’s engagement with certain online marketplaces on behalf of our members. It is fitting that the issue focus for the 2020 Notorious Markets List is on e-commerce platforms and other third-party intermediaries that facilitate the importation of counterfeit and pirated goods into the United States. Online counterfeiting continues to be a growing issue for AAFA members, and the COVID-19 pandemic has only exacerbated this problem. The pandemic has disrupted supply chains worldwide and forced physical stores and markets to close, drastically driving consumer traffic to online channels. While we embrace the growth of e-commerce, unfortunately, counterfeiters have as well, taking advantage of these circumstances globally and flocking to sell their fake goods online. They have also targeted consumers with phishing and fraud schemes. As a result, AAFA members have reported massive spikes in illicit activity occurring on online marketplaces during the first half of 2020. Now more than ever, it is critical for online marketplaces 1 to take the necessary steps to prevent their platforms from being misused, and, more importantly, to protect consumers from unwittingly being sold fake products during a global health crisis. While this report is important to publicize progress and weaknesses in the efforts that marketplaces make to fight counterfeits, and has become an essential tool in the fight against illicit goods by pressuring companies to significantly improve their mitigation efforts, it is clear that we need legislation to ultimately address the problem. The online landscape is clearly shifting. Marketplaces must have accountability to create pressure to effectively address the issue of counterfeit goods sold on their platforms. Legislation pending before Congress would help in two important respects. First, it would establish clear and binding legal obligations to proactively prevent the online sale of counterfeits. There is room to establish balanced standards and factors to evaluate and assign legal liability when appropriate. Second, it would increase requirements to provide consumers with transparency about who they are purchasing from online. We firmly believe that such an approach will increase certainty and create stronger partnerships in the shared fight against online counterfeiting and piracy. It is time to take these necessary steps to protect American consumers and American businesses from the many harms of counterfeit sales. We encourage USTR to continue to monitor developments in this space, and, where appropriate, to engage in relevant policy discussions on this important issue. Recommendations to be included in the Notorious Markets List are drawn from the extensive feedback from a broad swath of AAFA members who have regular and continuous experience enforcing their brands’ intellectual property. We generally include those entities where we believe there are insufficient efforts to block and/or remove counterfeiters and/or where the markets are actively encouraging illicit activity. Throughout the year, and in the weeks leading up to this cycle, we work closely with our members to identify concerns. Where possible, we look to mitigate those concerns directly with marketplaces and have developed robust engagements—including several mentioned below—with platforms. It is our hope that all these tools—direct engagement with selected marketplaces that want to cooperate, inclusion on the Notorious Markets List, and legislative solutions—will ensure that criminals have significantly fewer opportunities to sell counterfeits. Online Markets The interests of AAFA members are directly and adversely impacted by the sale of counterfeit goods through online third-party marketplaces. Because of the anonymity of online shopping and the inability to physically inspect goods before purchasing, combined with the trusted reputation of many online marketplaces, many consumers are deceived into purchasing counterfeits when they have a good-faith belief that they are purchasing genuine products. Although it is impossible to identify the country of manufacture of every infringing product identified online, U.S. Government data indicates that the overwhelming majority of counterfeits sold globally originates overseas, in particular in China, and AAFA members reasonably assume that sales through U.S. platforms reflect similar trends. As we emphasized in our submission last year, we encourage USTR to include U.S.-based and U.S.-owned markets as part of this process. In the 2019 List, USTR acknowledged that while it did not request submissions on U.S.-based e- commerce platforms and online third-party marketplaces, the Administration has been looking at their role following the issuance in April 2019 of a Presidential Memorandum addressing trafficking in counterfeit and pirated goods. AAFA appreciates this acknowledgement and hopes USTR will broaden the scope of the review process this year given the significant role that domestic marketplaces have played in facilitating the sale of counterfeit goods, especially during the COVID-19 pandemic. Accordingly, AAFA has included several U.S.-based and U.S.-owned online markets in our submission this year. 2 With the rise in purchasing online through social media channels, which has exploded during the pandemic, our members have also witnessed a flood of counterfeits and fraudulent advertising on many of these platforms as well. Immediate action must be taken to stop this deluge of counterfeits and fraudulent advertising, which we detail below. The success of online marketplace brand protection programs must be measured by an across- the-board system that works for all brands, regardless of size. Such a system must focus primarily on preventing the listing of counterfeit products and then providing an expeditious and efficient back-up notice-and-takedown system. The preventative system must evolve and “learn from” experience gained through preventative and reactive activity. AAFA recommends the below online markets to USTR for its 2020 Notorious Markets List. We have separated our online recommendations into two categories: (1) U.S.-based and U.S.-owned online markets and (2) Foreign online markets. U.S. Based and U.S. Owned Online Markets I. AMAZON.COM, INC. AAFA has had regular dialogue with Amazon representatives over the last two years to address the numerous and ongoing brand protection concerns of our members. We have also facilitated numerous opportunities for members to engage directly with Amazon, including monthly conference calls and in-person meetings. This increased engagement has been helpful and has created a useful dialogue to enable individual companies to resolve specific problems and a forum to address larger issues shared by many brands. Many brands, however, continue to experience difficulties and have not yet seen consistent improvements expected to result from such dialogue. Some member brands have seen improvements in the level of attention, response times, and number of resources devoted to understanding and addressing the serious counterfeiting issues still present across the Amazon ecosystem. While we welcome the progress Amazon has made to date, we believe more needs to be done to ensure sustained, irreversible progress in the fight against counterfeits on Amazon’s marketplaces, particularly in the COVID-era where the rise of counterfeiting has more than matched the rise of e-commerce globally. As one member explains: “Amazon is getting better, but they define low expectations and begrudging incrementalism. We think they could be doing a lot more.” In 2018 and 2019, AAFA recommended Amazon’s foreign marketplace extensions—specifically amazon.ca, amazon.co.uk, amazon.de, amazon.fr, and amazon.in—for inclusion on the Notorious Markets List. In 2019, Amazon’s foreign domains were designated as Notorious Markets by USTR. This year, members

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