Business

Luxury goods brands sue Alibaba over counterfeits

Gucci, Yves Saint Laurent, and other luxury brands owned by France's Kering have sued Alibaba in a Manhattan court, alleging the Chinese e-commerce giant has knowingly allowed the sale of counterfeit goods by merchants using its marketplaces.

The plaintiffs claim Alibaba has allowed fake goods sales to continue even when it had been informed about them. They're seeking a court order that would block their sale, along with damages that could include US$ 2 per counterfeit item.

Alibaba officials said, "We continue to work in partnership with numerous brands to help them protect their intellectual property ... 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."

In December, the company said it has spent US$ 161 million fighting counterfeits since 2013. A Chinese regulator later blasted Alibaba for not doing enough to battle counterfeits, but backtracked after the company complained.

Counterfeit concerns could act as a thorn in Alibaba's side as it tries to expand internationally; new CEO Daniel Zhang recently promised to invest heavily in overseas ventures. Working in Alibaba's favour (at least in the U.S.): A 2008 court ruling for an eBay/Tiffany suit declaring it's the responsibility of a trademark owner (rather than a marketplace) to find counterfeit goods and send takedown requests. Separately, Soros Fund Management, Tiger Global, Viking Global, and other major hedge funds have disclosed they upped their Alibaba stakes in Q1 (possibly after shares sold off in response to January's FQ3 report). Dan