The owner of several of the world’s best-known luxury brands has filed a fresh lawsuit against Alibaba Group Holding Ltd. , the latest challenge to the Chinese e-commerce giant’s assertions that it fights the sale of counterfeit goods on its platforms.
The lawsuit, filed Friday in federal court in Manhattan by Gucci, Balenciaga, Yves Saint Laurent and other brands owned by Paris-based Kering SA, indicates that the company is unsatisfied with Alibaba’s efforts to address the problem of counterfeiting of its brands. The suit alleges that Alibaba and its associated companies “knowingly encourage, assist, and profit from the sale of counterfeits on their online platforms,” according to a copy of the filing reviewed by The Wall Street Journal.
Alibaba said the complaint had no basis and that it has a “strong track record” of helping brands fight counterfeits. “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,” an Alibaba spokesman said. It is the second time Kering’s brands have sued Alibaba. Last July, a few months before Alibaba launched its initial public offering in the U.S., the luxury brands filed a similar lawsuit against Alibaba but then withdrew it two weeks later.
Alibaba and Kering had said that they would work together to reduce the counterfeiting of Kering’s brands. The brands said in the latest filing that the claims made last July were now being reasserted. Among the lawsuit’s allegations are that Alibaba permits and encourages “numerous counterfeiters” to operate on its various platforms even when the merchants openly state that they are selling fake goods. The suit alleges that Alibaba helps counterfeiters by providing them marketing and logistical services on its various platforms, including the international wholesale trading site Alibaba.com, the global shopping site AliExpress.com and Taobao, its bazaar-like online marketplace.
Alibaba sells keywords to counterfeiters that include the names of Kering brands, allowing the merchants to attract more customers to buy fake goods that bear the brands, the lawsuit alleges. Also, it alleges, Alibaba’s search engine will suggest terms such as “cucchi” and “guchi” when “Gucci” is typed into search bars, directing customers to sellers of fake merchandise and enabling Alibaba to profit from the sales of such keywords. The Kering brands are seeking unspecified damages based on sales or profit from the items and a court order preventing Alibaba from participating in the sale, marketing and distribution of counterfeit products, among other measures.
Such complaints underscore one risk for Alibaba, which in September raised $25 billion from global investors in the world’s largest initial public offering. Alibaba has long grappled with allegations that its online shopping platform Taobao is full of counterfeit merchandise, which could damage the company’s reputation and image among investors and brands. The issue was a key focus of a Chinese government report in late January that criticized Alibaba for not doing enough to address the sale of fake goods, bribery and other illegal activity on its sites. Chinese officials later removed the report in what Alibaba called a vindication.