October 1, 2018

Mr. Sung Chang Director for Innovation and Intellectual Property Office of the United States Trade Representative 600 17th Street NW Washington, D.C. 20508

RE: 2018 Special 301 Out-of-Cycle Review of Notorious Markets Docket Number: USTR-2018-0027 Submitted electronically at: www.regulations.gov

Dear Mr. Chang:

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’s (USTR) 2018 Special 301 Out-of-Cycle Review of Notorious Markets. We are grateful to USTR for its strong and unfaltering commitment to the protection of American intellectual property rights around the world.

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 $384 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. Stolen intellectual property costs our members billions in lost sales, damage to brand reputation, and substantial legal expenses. Ultimately, these costs lead to U.S. job losses and higher costs for U.S. consumers.

On this note, we would like to highlight our concerns over the recent imposition of tariffs under Section 301, specifically as they may stimulate trade of counterfeit goods. The new tariffs announced by the Administration will impose a tax on legitimately traded goods from China and these taxes will be paid by U.S. branded companies (who also take steps to ensure their products comply with applicable laws and taxes). Counterfeiters, on the other hand, will likely avoid these duties, driving up the delta between legitimately traded items and their illegal knockoffs. This could have the unintended, adverse impact of driving certain consumers to purchase counterfeit goods as a cheaper alternative. These tariffs, which are being imposed following an investigation designed to arrest intellectual property rights abuses in China, could ironically make the problem worse.

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Below you will find the online and physical markets flagged by our members for engaging in and facilitating substantial trademark counterfeiting and copyright piracy.

Online Markets The rise of e-commerce has connected consumers in the U.S. and around the world with an ever- growing network of criminal counterfeiters, especially on third-party marketplaces. Counterfeiters have adopted an array of tactics to deceive consumers and have exploited online platforms to gain an appearance of legitimacy. It is for this reason that online markets must be proactive in their approach to combat intellectual property theft and misuse.

AAFA recommends the following online markets to USTR for its 2018 Notorious Markets List:

1. AMAZON: amazon.co.uk (United Kingdom), amazon.ca (Canada), and amazon.de (Germany)1 Amazon dominates as an online global marketplace for apparel and footwear. As the platform continues to grow, AAFA members recognize the significant opportunities to utilize the platform to connect with consumers around the world. Some brands have partnered with Amazon to set up official storefronts and others have ongoing working relationships with the platform.

At the same time, our members are growing increasingly frustrated with how the platform protects their intellectual property. Brands report that the proliferation of third-party sellers on the platform has led to the widespread availability of counterfeit goods. According to Amazon, in 2017, for the first time in Amazon’s history, more than half of the units sold on Amazon worldwide were from third-party sellers.2 Not all third-party sellers facilitate the sale of counterfeit goods on Amazon. However, there is a growing concern—which many members have validated through experience—that Amazon’s selling structure limits the ability of both brands and consumers to verify the authenticity of goods.

AAFA has had regular and consistent dialogue with Amazon over the past year to address the intellectual property related concerns of our members. We have also facilitated numerous opportunities for our members to engage with Amazon. In May, AAFA held an in-person meeting at Amazon headquarters for our member brands to discuss recurring issues on the platform with the Customer & Brand Protection team.

It is our hope that the dialogue we have established with Amazon will not only continue, but that it will result in actual improvement. Many of our members report that little, if anything, has changed regarding the protection of intellectual property on the platform over the past twelve months, despite these open channels of communication as well as updates to Amazon’s brand protection programs and functionalities. Members have been dealing with recurring issues, as detailed below, and have not seen progress. This is particularly frustrating given Amazon’s leadership as a technology and retail company.

Members consider Amazon.co.uk, Amazon.ca, and Amazon.de to be the most unresponsive and non-compliant Amazon marketplace extensions. Below are the concerns members have flagged for the attention of USTR:

1 While USTR’s Notorious Markets List is concerned with foreign markets that engage in and facilitate substantial trademark counterfeiting and copyright piracy, it is important to emphasize that many of AAFA’s members report the same issues detailed in this section also persist on Amazon.com. 2 https://www.sec.gov/Archives/edgar/data/1018724/000119312518121161/d456916dex991.htm 2

• Fake Brands: Members report coming across products that use their trademarks and brand names to identify product, but that are in no way associated with the actual brand. These “fake brands” infringe on registered trademarks. Members report Amazon is aware of this problem, and sometimes takes steps to interdict them, yet the same “fake brands” resurface on the platform, sometimes months later.

• “By [Brand]”: Amazon’s use of a brand’s trademarks “by [brand]” in product listings is a source of frustration for members and a source of confusion for consumers. For brands, especially those brands that do not sell directly on Amazon, having products listed as “by [brand]” is at best unauthorized and at worst counterfeit. Moreover, this is confusing for consumers shopping on Amazon, who may believe they are receiving product from the authentic brand or an authorized third-party seller—especially as these listings often include a copyrighted image from a legitimate website.

• Inconsistencies in Reporting and Responding to Notice of Complained Infringement (NOCI): Members report that after a notice of complained infringement (NOCI) has been submitted, inconsistencies exist in the handling of submissions. Members also report inconsistencies in Amazon’s removal of identical items on the platform. For example, Amazon’s review team may determine that one set of 50 ASINs—Amazon Standard Identification Numbers—is infringing and will therefore remove the content. However, the review team could then determine that the next set of 50 ASINs for the exact same product and brand are not infringing and will therefore take no action for those ASINs. This leaves brand protection and legal teams with scattered results and uncertainty as to how to engage with Amazon to protect their brands.

• “Just Launched” Sellers and Recidivist Sellers: Often, members see ASINs—that had previously been reported as infringing—surface again with “Just Launched” sellers. Typically, a “Just Launched” seller’s name is made up of a sequence of letters and/or numbers otherwise not in recognizable English syntax. These “Just Launched” sellers usually come down within 1-3 days, but the ASIN remains live with “no” offers. New sellers attach themselves to that ASIN immediately. One member reports encountering ASINs with over thirty sellers attached, where only a handful of sellers are authorized. Amazon seems to have little or no control over new sellers. Amazon claims to “vet” their sellers, but there have been days where members encounter dozens of new sellers listing counterfeit products. Members report they must repeatedly follow up with Amazon when they need a problem seller or network of sellers—with the same or similar listings— removed.

• Pushback on Copyright and Design Rights: The unauthorized use of a licensed image in a listing misleads consumers who do not know that the product is not coming from an authorized seller. On Amazon.co.uk, members continue to locate and report copyright infringement, noting that they have received pushback on almost all their requests. Pushback refers to e-mails from Amazon notifying a brand or vendor that they are not going to remove the listings or requesting more information before they can do so.

• Brand Registry: Members have had mixed experiences with Amazon’s Brand Registry. Amazon’s Brand Registry program is designed to help protect registered trademarks on

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Amazon.3 Some AAFA members have elected to enroll in this program on behalf of their brands. They have reported some progress; however, they have seen little improvement on the functionality and effectiveness of Brand Registry overall. One member said the following of Brand Registry: “I have also not found Brand Registry to be particularly useful and have reached out to Amazon on behalf of clients to try to understand how to use it effectively but have gotten radio silence!” Other members have not enrolled in the program because of the Brand Registry terms of use, which they believe to be generally unfavorable to brands.

• Commingled Apparel and Footwear: Amazon’s practice of commingling first party merchandise with third-party seller merchandise negatively impacts our members. Amazon commingles our member's inventory with inventory belonging to third-party sellers without providing our members with the transparency of the third-party seller and/or source of their inventory. Therefore, our members’ customers have been unknowingly receiving counterfeit branded merchandise.

We hope that Amazon will continue to work with our members to address their concerns. Our members believe that Amazon has a responsibility to be more transparent to both brands and consumers. Brands would like Amazon to be more forthcoming in terms of enforcement figures, especially when it comes to which listings they proactively remove. Furthermore, brands would like to see Amazon’s search functionality provide more transparent information to consumers— such as the “by [brand]” feature. The damage to a brand’s reputation can be immeasurable. Therefore, we encourage Amazon to improve and to actively enforce its intellectual property policies to keep counterfeit sellers off the platform.

2. SHOPEE: shopee.com.my, shopee.ph, shopee.co.th, and shopee.co.id Members report that Shopee has been difficult to connect with. After providing the requisite information to set up an enforcement account, Shopee continued to ask for additional details or claim that the information provided was insufficient. Members note that they have been cooperative in response to Shopee’s requests for more information, however, they did not get very far. It appears that Shopee is aware of counterfeit listings on their platforms given that members have submitted items in spreadsheet format referencing infringements and citing the appropriate intellectual property rights, yet Shopee has acted with no sense of urgency.

3. BUKALAPAK: bukalapak.com Members continue to see a high volume of counterfeit products on Bukalapak, even after reporting upwards of 200 listings per month. The platform’s response time has not improved, and members note that Bukalapak has not implemented new procedures that would allow for easier, effective reporting. Moreover, members report that the removal of counterfeit listings has not improved. In fact, some items are not removed entirely—you are unable to “add to cart,” but the item page is still active with the item image, listing title and description and seller information. There are also inconsistencies with how items are removed from the platform. Additionally, it does not appear that Bukalapak has any protocols in place to suspend or “strike” recidivist sellers.

4. UDAAN: udaan.com Members report that while Udaan is responsive, the platform continues to facilitate the sale of counterfeit goods in high volumes. It seems that the platform has grown in popularity due to

3 https://services.amazon.com/brand-registry/vc.html 4

Udaan’s mobile application and functionality. The platform does not appear to have protocols in place to suspend or “strike” recidivist sellers.

5. MACY’S KOREA: macyskorea.co.kr/main/main_real.asp Originally, this website was under macyskorea.com. Macy’s filed a lawsuit against the website and won default judgment resulting in the takedown of site. Before the suit was filed, Macy’s reached out to the ISP to get it down, but the ISP refused. The site then moved to the .kr site and, as a result, Macy’s cannot file a suit against them (even though it’s the same site). Macy’s is currently working to get this site down but is having difficulty.

Physical Markets While the focus of AAFA’s Brand Protection Council (BPC) in recent months has largely been on the proliferation of counterfeits on online markets, these goods continue to be sold in physical markets around the globe. AAFA recommends the physical markets outlined in the attachment to the USTR for its 2018 Notorious Markets List.

AAFA would like to highlight the presence of illegal street vendors in Barcelona offering counterfeit goods for sale. Hundreds of “manteros,” or illegal vendors, set up shop on important commercial areas throughout Barcelona, including Paseo de Gracia, Las Ramblas, and Plaza de Cataluña. Local law enforcement does little, if anything, to seize illegal merchandise or detain vendors. While the whole city of Barcelona cannot be considered a Notorious Market, it is important for USTR to realize the extent of the problem and to work with the governing body in the City of Barcelona to protect American intellectual property.

Thank you for your immediate attention to his important issue. I look forward to continuing this dialogue to protect American ingenuity and competitiveness abroad. Please contact me if you have any additional questions at [email protected] or via phone at 202.853.9347.

Sincerely,

Stephen Lamar Executive Vice President American Apparel & Footwear Association Attachments

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Attachment

Physical Markets

ARGENTINA MARKET NAME LOCATION La Salada Fair Int. Tavano 5085 Street, Lomas de Zamora district, Buenos Aires

BRAZIL MARKET NAME LOCATION Shopping 25 de Março Mall 1081, 25 de Março Street, São Paulo

BOLIVIA MARKET NAME LOCATION HUYUSTUS MARKET Huyustus street between Calatayud and Buenos Aires streets, La Paz. TUMUSLA STREET Tumusla street to Buenos Aires street, La Paz. GRANEROS MARKET Graneros street between Max Paredes and Murillo streets, La Paz. COMERCIO STREET Comercio street to Pichincha, La Paz. 16 DE JULIO FAIR 16 de julio street, La Paz. JORGE CARRASCO STREET From La Ceja (El Alto) to St.9, La Paz. VILLA FATIMA MARKET Las Americas Avenue, La Paz. ZONA CENTRAL MARKET Potosi and Loayza streets, La Paz. BARRIO LINDO FAIR Potosi and Loayza streets, Santa Cruz. 7 CALLES FAIR Valle Grande street to Figueroa street, Santa Cruz. LA RAMADA MARKET Grigota to Muchiri streets, Santa Cruz. MUTUALISTA MARKET 3rd Ring to Mercado Mutualista, Santa Cruz. 25 DE MAYO MARKET Jordan to 25 de mayo street, Cochabamba. OQUENDO AVENUE Oquedo avenue, Cochabamba. CAMPESINO MARKET Froilan Tejerina Avenue, Tarija. VIBORA NEGRA MARKET Quebrada Vivora Negra, Tarija. LA KANTUTA FAIR Tacna Ave to Calle C St., Oruro. NARCISO CAMPERO MARKET Bolivar to Pagador, Oruro. FERMIN LOPEZ MARKET Ayacucho to Presidente Montes Street, Oruro.

CHINA MARKET NAME LOCATION Xintang International Jeans City新塘国际牛仔 Beside the Guangzhou-Shenzheng Express 城 Way, Guangzhou Zhanxi Garment Wholesale Market 站西服装 Zhanxi Road Station West Road, Guangzhou 批发市场 Yulong Garment Wholesale Market 广州御龙 229 Guangyuan W Rd, SanYuanLi, Yuexiu 服装批发市场 Qu, Guangzhou Jin Long Pan Garment Market 广州金龙盘服 San Yuan Li Av, Baiyun district. Guangzhou 装批发市场 Guangda 6

Guangda Garment Commercial City 广大服装 Fenggang Lukou, Zengcha Lu, Baiyun District, 商贸城 Guangzhou Shijing Yinma International Clothing City 石井 Shitan West Road, Guangzhou 银马国际服装城 Qingfeng Garment City 庆丰服装城 Shijing Subdistrict, Guangzhou Guangda Leather /Denim Jeans City 广大皮具 Shijing Subdistrict, Guangzhou 牛仔城 Tangqi Export Clothes City唐旗外贸服装城 130-134 Guangyuan Xi Lu, Yuexiu District, Guangzhou Longrui International Garment City中山市龙瑞 105 National Rd, Zhongshan, Guangdong 国际服装城 Qijiang Expressway Garment Market 中山岐 Qijiang Main Road, Shaxi Town, Zhongshan, 江公路服装市场 Guangdong Chengdu Hehuachi (Lotus Pond) Wholesale 28 Beizhan East 1st Rd, Jinniu Qu, Chengdu Market 成都荷花池批发市场 Shi, Sichuan Sheng Wuhan Qiaokou District Market武汉硚口区汉 Hanzheng St, HanZhengJie ShangQuan, 正街华茂商城 Qiaokou Qu, Wuhan Shi, Hubei Sheng Yiwu International Merchandise City 义乌国际 International Trade City, Yinhai Road, Futian 小商品城 District, Yiwu Jimo District Garment Market 即墨区服装市场 Jimo Shi He Shan Lu 867 Hao, Qingdao Changshu Wholesale Market Chang Shu Shi Zhao Shang Lu, Suzhou 常熟市外贸批发市场

ECUADOR MARKET NAME LOCATION La Bahia Market Guayaquil La Calle Ipiales Quito San Bartolomé de Pinllo (street markets) Ambato

INDONESIA MARKET NAME LOCATION Mangga Dua Pademangan subdistrict, North Jakarta Tanah Abang Market Kelurahan Kebon Kacang, Central Jakarta Pasar Baru Bandung City Center Gang Tamim Market Jl. Tamim, Bandung Cihampelas Bandung City Center

INDIA MARKET NAME LOCATION Heera Panna Market Mumbai located near Haji Ali Tank Road, Karol Bagh Market Karol Bagh, Delhi Gandhi Nagar Market Delhi Welcome Colony Welcome, Seelampur, Delhi Akaal Garh Market Ludhiana, Punjab Gandhi Nagar Market Ludhiana, Punjab 7

A C Market Ludhiana, Punjab Focal Point/Bahadur Ke Road Ludhiana, Punjab Manish Market Ludhiana, Punjab Todapur Dus Ghara Delhi Kamla Nahar Delhi Lajpatnagar Delhi Sarojini Nagar, Delhi Shopping Center Sector-17 Chandigarh Shastri Market Sector-22 Chandigarh Bommanhalli Bangalore, Karnataka Koramangala Bangalore, Karnataka Malakpet Bangalore, Karnataka New Market Kolkata Atta Market Noida, Uttar Pradesh Dashrath Readymade Market Indore, Madhya Pradesh Victoria Market Indore, Madhya Pradesh Khar West Mumbai L.T. Marg Mumbai Guwahati Mumbai Hong Kong Market Siliguri, West Bengal Maidan Market Kolkata, West Bengal Barabazar Kolkata, West Bengal

ISRAEL MARKET NAME LOCATION Ramle – Lod Market Between Herzl Blvd., Detroit Community St. and Jabotinsky Street, Ramle.

KYRGYZSTAN MARKET NAME LOCATION Dordoy market 74/4 Kozhevennaya St., Bishkek

KAZAKHSTAN MARKET NAME LOCATION ICBC Khorgos cross-border free trade zone China / Kazakhstan border

MALAYSIA MARKET NAME LOCATION Kenanga Wholesale City 2, Jalan Gelugor, Pudu, 55200 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur GM Klang Wholesale City Jalan Kasuarina 1, Bandar Botanic Capital, 41200 Klang, Selango Plaza GM Lorong Haji Taib 5, Chow Kit, 50350 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur

MEXICO MARKET NAME LOCATION El Tepito Colonia Morelos, Cuauhtémoc borough, Mexico City 8

San Juan de Dios Guadalajara, Jalisco Tianguis (mobile street vendors) Narvarte, Montezuma, Aragón, Ecatepec, La Raza, Ciudad, Lago, Las Torres, Guelatao, Texcoco, Chalco, and Eje Central Lázaro Cárdenas

RUSSIA MARKET NAME LOCATION SADOVOD Market MKAD ring road, Moscow Moscow Market 1 Tikhoretsky blvd., Lublino Dubrovka market 13-3 Sharikopodshipnikovskaya St. South Gates market (Yuzhnye Vorota) MKAD ring road, Moscow Mytyshi market MKAD ring road, Moscow Slavic World (Slavyanski mir) MKAD ring road, Moscow Luzhniki market (Silk Way) MKAD ring road, Moscow Shopping mall International 96/1 Nikolo-Khovansky village New Moscow

SPAIN MARKET NAME LOCATION Els Limits de La Jonquera Girona, Catalonia City of Barcelona City filled with fast-moving illegal open-air market that occupies the most important commercial streets and touristic places: Ramblas, Plaza de Cataluña, Paseo de Gracia, Avenida Joan de Borbó, Catalonia. Cobo Calleja Fuenlabrada, south of Madrid

SOUTH AFRICA MARKET NAME LOCATION Jeppe Street From Polly to Von Brandis streets, Johannesburg

THAILAND MARKET NAME LOCATION Jatujak/Chatuchak Weekend Market Kamphaeng Phet 2 Road, Chatuchak, (“JJ”Market) , MBK Shopping Centre Pathum Wan, Bangkok University and Siam Square Pathum Wan, Bangkok Klong Thom (Chinatown) Corner of Worachak Road and Chao Kamrop Road, Bangkok Sukhumvit Soi 3 and Asoke, Bangkok Patpong Market Between Silom Road and Surawong Road, Bangkok Pratunam Market (including Platinum Fashion 1, Thanon Phetchaburi, Ratchathewi, Mall, Baiyoke Towers I and II) Bangkok 10400 Thailand Bobae Market 488 Bobae Tower Damrongrak Road, (Off Krungkasem Road) Klong Mahanak, Pomprab, Bangkok 10100 Ratchada Market Behind esplanade Plaza, Bangkok 9

Train (Rod Fai) Market Ratchada, Srinakarin next door from Second square, Bangkok Liab Duan Market Prasert-Manukitch Road, Bangkok Hua-Mum Market Kaset-Nawamin Rd, Bangkok Saphanphut Night Market (new location) Phayamai Rd., Bangkok Ratchayothin Market Located next to Major Cineplex Ratchayothin bordering Phahonyothin Road in , Bangkok Kimyong Market Hat Yai District, Songkhla border market (aka- Market) Border of Thailand and Myanmar, Chiang Rai TA SADET MARKET Mueang, Rong Kluea Market , Chong Chom Market Dan, Kap Choeng District, Surin Bantam Market Chanthaburi Nokhook Market Chang Wat, Nonthaburi

TURKEY MARKET NAME LOCATION Bodrum Cevat Şakir Cad., Atatürk Cad. Cumhuriyet Cad., Bodrum Laleli Wholesale markets Istanbul Aksaray Neighborhood in district of Fatih, Istanbul Eminönü Bazaar Merkez Mah., Eminönü Otobüs Durakları Yolu, 34116 Eminönü, Fatih, Istanbul Bakirkoy Neigborhood known for “underground” textile manufacture, Istanbul Alanya Market Çarşi Mah, Alanya Kusadasi Market Barbaros Blvd., Kusadasi Grand Bazaar Beyazıt Mh., Istanbul Kucukcekmece Manufacture

VIETNAM MARKET NAME LOCATION Dong Xuan Market District 5 – HCMC Ben Thanh Market District 5 – HCMC Tan Binh Market Tan Binh District - HCMC Nin Hiep Market Ninh Hiep Ward, Gia Lam District, Hanoi Saigon Square Nam Ky Khoi Nghia Road, District 1, HCMC

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