INTERNET: Regulator Should Mediate ‘Double Eleven’ Trademark Row

Bottom line: The Commerce Ministry should mediate an industrywide settlement over Alibaba’s claims to the Double Eleven Trademark to prevent the dispute from disrupting the nation’s e-commerce development.

Regulator should mediate Double Eleven dispute

As the buying frenzy builds to a crescendo on this year’s November 11 Singles Day, e-commerce giant Alibaba (NYSE: BABA) should be commended for turning an ordinary day of the year into a shoppers paradise that now generates more sales than any other major retailing day in the world. (company announcement)

But this year’s binge-buying day has also seen some controversy, as Alibaba’s flagship Tmall shopping site reportedly made behind-the-scenes threats to some media warning them not to run advertisements featuring the Double Eleven moniker. Tmall reportedly said such ads violated its trademarks, and indeed Alibaba has registered several trademarks related to the “Double Eleven” name that is a Chinese shorthand for the eleventh day of the eleventh month each year.  (previous post)
Alibaba surely deserves credit for creating the Single’s Day phenomenon in just 5 years, and has spent massive sums to market and promote the event. But the huge sales volume it now earns each November 11 should be its main reward, and Double Eleven day should become property of the broader retailing world that benefits from a huge sales surge each year.

To prevent further clashes and foster healthy development of this made-in-China shopping phenomenon, the nation’s retailing regulator, the Ministry of Commerce, should step in and help to mediate a longer-term agreement to resolve the matter. Such a role is suitable for the regulator, whose position as a promoter of a healthy retail environment and lack of favoritism towards individual companies will ensure the shopping holiday continues to grow and perhaps even goes global.

China’s media have been buzzing overtime these last few weeks in the build-up to this year’s Double Eleven day, which encourages young people to celebrate their single status by pampering themselves with goods purchased online and in traditional stores. The date of November 11 was chosen because it contains four “1” digits, representing the pinnacle of singledom.

Alibaba is generally credited with focusing on Double Eleven starting in 2009 and turning it into the major event it has now become. Last year alone, the company posted a staggering 35 billion yuan ($5.7 billion) in transactions on its main shopping platforms, nearly double the previous year. That figure was more than all money spent by US shoppers combined on Black Friday and Cyber Monday during the Christmas buying season, generally considered the 2 biggest shopping days for an individual country.

Other retailers have jumped on the Double Eleven bandwagon as the phenomenon has grown, and last year total sales for the day reached $8 billion.

But Alibaba has also spent heavily on promotions to win such big sales. In a public filing before its record-setting IPO in September, Alibaba said its sales and marketing costs ballooned to 1.9 billion yuan in the fourth quarter of 2013 that included last year’s Double Eleven day, tripling from the previous quarter. A big portion of that rise is believed to have gone to Singles Day promotional spending.

Alibaba has registered at least 6 trademarks associated with the Double Eleven name, and last month sent threatening letters to some media warning them not to run promotions with the motif from other retailers. An alleged copy of the letter was posted online by Alibaba rival (Nasdaq: JD), which criticized the threats as contrary to the open spirit of the Internet and fair competition.

The situation with Double Eleven is similar to the west, where many major shopping holidays like Christmas and Valentine’s Day were also initially commercialized by small groups of companies. One strikingly similar parallel is Mother’s Day, which was originally created in 1908 but became a major commercial event in the 1920s due to the efforts of US greeting card companies led by Hallmark, which used the occasion to boost sales.

No one today claims to own the rights to Mother’s Day, Christmas or any other major holiday, and even Alibaba is only claiming rights to certain images associated with Double Eleven. Still, this kind of tack and resulting threats won’t help China’s broader retailing sector over the long term, and could even damage the image of Double Eleven in the minds of Chinese shoppers.

To prevent the situation from getting out of hand, the Commerce Ministry could step in after the current shopping festival ends and help to mediate a settlement that would be acceptable to Alibaba, and other major retailers. Such an agreement would end the squabbling and prevent potential future lawsuits, laying the foundation for the long-term survival and thriving of this uniquely Chinese shopping day.

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