A group of luxury fashion brands are suing Alibaba, contending that the Chinese online shopping giant knowingly made it possible for counterfeiters to sell their products throughout the world. In their complaint, which was filed in the Southern District of New York court last week, Gucci, Yves Saint Laurent and other brands owned by Paris-based conglomerate, Kering SA, allege that Alibaba conspired to manufacture, offer for sale and traffic in counterfeit products bearing their trademarks without their permission.
This lawsuit comes on the heels of an August 2014 settlement between Kering and Alibaba after Kering withdrew a nearly identical lawsuit last year. According to the terms of their settlement, Alibaba would cooperate with Kering to stem the sale of fake products. Well, apparently Alibaba, which holds the title of the biggest initial public offering in the world, thanks to its $25 billion listing on the New York Stock Exchange in September 2014, was not holding up its end of the deal.
Friday's lawsuit marked the second time in less than a year that the Kering brands have sued Alibaba over the alleged sale of counterfeit products. This time, Paris-based Kering is suing on behalf of Balenciaga, Bottega Veneta, Gucci, and others, alleging that Alibaba and its associated companies “knowingly encourage, assist, and profit from the sale of counterfeits on their online platforms." Case in point: Kering states that Alibaba provides search suggestions, such as “replica” and “cucci” and “guchi”, go lead potential customers to fake products.
Moreover, Kering states in its complaint: “The Alibaba defendants facilitate and encourage the sale of an enormous number of counterfeit products through their self-described ‘ecosystem,’ which provides manufacturers, sellers, and buyers of counterfeit goods with a marketplace for such goods, and provides online marketing, credit card processing, financing, and shipping services that effectuate the sale of the counterfeit products.”
As a result, Kering is seeking a court order that, among other things, would block Alibaba from offering or facilitating the sale of counterfeit products and unspecified damages that could include $2 per counterfeit item sold.
A spokesman for Alibaba has responded to Kering's lawsuit, saying the complaint had no basis and that Alibaba has a “strong track record” of helping brands fight counterfeits. He continued on to say: “Unfortunately, Kering Group has chosen the path of wasteful litigation instead of the path of constructive cooperation. We believe this complaint has no basis and we will fight it vigorously."
Given the parties' history, this is sure to be an interesting lawsuit. More to come ...