Even though Alibaba continues to be world’s biggest e-commerce brand, it may well be the one with most counterfeit product sale accusations as well. In a fresh lawsuit, Alibaba has been sued by Gucci, Yves Saint Laurent and other brands owned by Paris-based Kering SA, alleging the e-com giant of knowingly allowing fake products carrying their trademark to be sold through their platform.
The brands have thus sought damages and an injection for violation of trademark and racketeering laws.
The lawsuit, which was filed in Manhattan Federal Court said that Alibaba and its related entities “provide the marketplace advertising and other essential services necessary for counterfeiters to sell their counterfeit products to customers in the United States.” It further elaborated by giving example of a Gucci handbag, originally worth $795, being sold at $2 to $5 each by a Chinese merchant to buyers seeking at least 2,000 units.
Alibaba has allowed for counterfeit sales to continue even when it had been expressly informed that merchants were selling fake products.
the lawsuit said.
A spokesman for Alibaba declined to make any comment regarding the lawsuit.
Such accusations of counterfeiting are not a new thing for Alibaba, the China-based online and mobile commerce company in retail and wholesale trade which takes a platform approach to shipping and delivery by working with third-party logistics service providers through a central logistics information system.
The Hangzhou-based, e-commerce giant with a staggering 80% e-commerce market share in China, has been facing such complaints for a long time now. One of its platforms called Taobao marketplace had once come under scrutiny for similar reasons of counterfeiting, earning itself a place in the list of “notorious markets” by U.S. Trade Representative.
And even though the name was removed later in 2012, the allegations did not stop.
In July 2014, the same company Kering SA had sued Alibaba for the same reason but the case was withdrawn in the same month after a hefty settlement between two parties.
Interestingly, just ahead of its IPO in September 2014, Alibaba, in an international brand building measure, penalized 131000 sellers and even cooperated with Chinese law enforcement agencies in more than 1000 counterfeiting cases leading to the arrests of 400 suspects. It also removed 90 million listings on its websites that may have breached intellectual property rights.
The Alibaba IPO has been by far, one of the biggest tech related IPOs in the history of internet, valuing the company at over $200 Billion at the time of a pre-IPO analysis.
As per its current policies, listing of counterfeit, non-licensed replicas or unauthorized products such as watches, handbags or other accessories in strictly prohibited on their site.
“No products can be sold on the Site without the explicit permission from the intellectual property right holder. Branded products are permitted to be displayed and sold on the Site if a certificate of authorization has been issued by the brand owner,” the company says.