The owner of many of the world’s most famous luxury brands has sued Alibaba Group Holding Ltd (NYSE:BABA) even as the Chinese e-commerce company asserts that it is battling the sale of counterfeit goods on its platforms.
The lawsuit filed in a New York federal court is on behalf of Gucci, Yves Saint Laurent and other brands of Kering. According to the brands, Alibaba knowingly helped several counterfeiters to sell their goods over its e-commerce sites. Kering charged Alibaba is complicit in the sale of fake handbags, watches and other items on its marketplace sites.
The Paris based group is suing for Balenciaga, the French luxury brands and Italian fashion house Bottega Veneta both belonging to it and states in the complaint that the service Alibaba offers to its marketplace customers encourage buyers to seek fraudulent goods. According to Alibaba the complaint was baseless, and the company reiterated that it had an exceptional track record of assisting brands fight counterfeits.
An Alibaba spokesman opined that it was unfortunate that Kering Group was pursuing wasteful litigation rather than constructive cooperation. Also, Alibaba would fight the complaint tooth and nail. This is the second instance of Kering’s brands suing Alibaba. The first lawsuit was filed last July only to be withdrawn by the luxury brands two weeks later.
Some of the counterfeiters are obscure Chinese vendors that are selling fake Gucci bags at cheap rates and in wholesale volumes. It is alleged that Alibaba’s search algorithms direct customers to these fakes even when it’s clear that the products are counterfeits.
Earlier this year the Chinese government charged Alibaba of ignoring illegal activities and not policing its online marketplaces. Alibaba has earlier stated that it incurred 1 billion yuan($161 million) over the past two years to fight intellectual property infringement and enhanced consumer protection.
In April, an American trade group had alleged Alibaba Group Holding Ltd (NYSE:BABA) was tolerating counterfeit goods on Taobao, its bazaar-like online marketplace. It remains to be seen whether Alibaba can come out unscathed from these serious charges.