Technology

Gucci Owner Launches New Suit Against Alibaba

Failure of settlement talks leads Paris-based Kering to renew claims that Alibaba facilitates sales of fake goods.
Matthew HellerMay 18, 2015

The Paris-based owner of Gucci, Yves Saint Laurent, and other fashion brands has renewed a legal attack on Alibaba, accusing the Chinese e-commerce giant of allowing its online platforms to be used to sell counterfeit products.

Kering SA had dropped a previous trademark infringement suit to try to reach an out-of-court settlement with Alibaba. With that effort apparently having proved unsuccessful, it has filed a new suit in Manhattan federal court.

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,” the complaint alleged.

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Kering cited Alibaba’s Taobao shopping service, saying one Chinese merchant had used it to “openly sell” wholesale quantities of “obviously fake Gucci products.”

In one instance, according to the suit, the merchant advertised a fake Gucci bag offered for $2 to $5 each — with the exact price to be determined by the size of the order, which had to be a minimum of 2,000 bags. The authentic bags retails for $795, Kering said.

“Instead of shutting down the counterfeiters, the Alibaba defendants seek to profit from the counterfeiters’ blatant violations,” the suit alleged.

Alibaba said in a statement that it has a “strong track record” of working with brands to protect their intellectual property. “Unfortunately, Kering Group has chosen the path of wasteful litigation instead of the path of constructive cooperation,” it said. “We believe this complaint has no basis and we will fight it vigorously.”

During a recent conference call to bank analysts, the BBC reported, Alibaba insisted it was enforcing a “zero tolerance policy” towards fakes. “If allegations [of] posting or selling counterfeit products are substantiated, we penalize the parties involved through a number of means,” Vice-chairman Joe Tsai said.

The suit says search suggestions such as “replica” and “cucci” and “guchi” lead Alibaba marketplace customers to fake products. The American Apparel & Footwear Association has described Taobao as “notorious as one of the biggest platforms for counterfeit goods worldwide.”