International

Luxury Brands Accuse Alibaba Of Selling Fake Goods

Accusations that Alibaba allowed for the sale of counterfeit goods have resurfaced for the eCommerce giant — this time from luxury brands, Reuters reported.

The lawsuit filed Friday in U.S. federal court comes from companies owned by Paris-based Kering, which includes Gucci and Yves Saint Laurent. The lawsuit alleges that Alibaba had enabled fake goods to be sold on its marketplaces on an international scale. It also accuses Alibaba of not only allowing for this activity to happen, but also playing a part in the manufacturing and sale of the fake goods that featured the luxury brands’ logos without the company’s knowledge. Alibaba is being sued for trademark and racketeering violations.

But an Alibaba spokesman has denied the company was involved in such a practice.

“We continue to work in partnership with numerous brands to help them protect their intellectual property, and we have a strong track record of doing so. 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,” Alibaba Spokesman Bob Christie said in a statement, according to Reuters.

This most recent lawsuit for Alibaba is the second time the Kering brands have filed suit against Alibaba for the same reason, Reuters reported. The previous lawsuit was withdrawn so the two companies could work through a resolution, but it appears they have failed to do so. The suit filed Friday alleges that Alibaba and its merchants “provide the marketplace advertising and other essential services necessary for counterfeiters to sell their counterfeit products to customers in the United States.”

Fake Gucci bags selling for hundreds less than their retail value was one of the specific examples highlighted in the lawsuit. Under the provisions of the suit, the company is seeking damages, plus an additional fee based on how many counterfeit goods were sold.

While Alibaba adamantly denies these accusations, it isn’t the first time the company has been tangled up in legal accusations related to the sale of counterfeit goods. In fact, just a few years ago, Alibaba’s businesses were listed on the U.S. Trade Representative’s list of “notorious markets” for intellectual property infringement.

Alibaba said at the tail end of last year that it has spent more than $160 million (1 billion yuan) combating counterfeit goods and improving customer protection since the start of 2013. Alibaba recognized then that prevalence of counterfeits could hurt its ability to win over customers, investors and U.S. retail partners.

“From Alibaba Group’s perspective, we bear a serious responsibility in this fight against counterfeits,” Alibaba CEO Jonathan Lu said in a prepared statement in late December 2014.

But in Alibaba’s biggest day for sale — Singles’ Day — when the company reported more than $9 billion in sales, China’s official State Administration of Industry and Commerce (SAIC) conducted an investigation on counterfeits on Singles’ Day and found 10.6 percent of the goods it bought online from various vendors and platforms were fake or highly suspicious.

Alibaba has also been forced to shut down online shops on its marketplaces that the company caught accepting bribes to receive fabricated reviews. Earlier this year, the company shut down 26 online shops on its Taobao marketplace for offering bribes to its staff to help drive growth on the platforms. Alibaba took this measure after it vowed to go after any merchant who was conducting unethical behavior on its sites.

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