Monday, 18 May 2015

Kering sues Alibaba over sales of counterfeit goods

Alibaba is being sued by the company behind luxury brands including Gucci and Louis Vuitton, which alleges the Chinese ecommerce group encourages and profits from the sale of counterfeit goods on its platform. Kering claimed Alibaba is complicit in the sale of fake handbags, watches and other items on its marketplace sites in a manner that constitutes “racketeering”, according to a lawsuit filed in New York on Friday.

The Paris-based group is suing on behalf of Balenciaga, the French luxury brands, and Italian fashion house Bottega Veneta, both of which it owns, and alleges in the complaint that the services Alibaba provides to its marketplace customers actively encourage buyers to look for fraudulent goods. Search suggestions such as “replica” and “cucci” and “guchi” lead potential customers to fake products, the complaint alleges.

“The Alibaba defendants facilitate and encourage the sale of an enormous number of counterfeit products through their self-described ‘ecosystem’, which provides manufacturers, sellers, and buyers of counterfeit goods with a marketplace for such goods, and provides online marketing, credit card processing, financing, and shipping services that effectuate the sale of the counterfeit products,” lawyers on behalf of the company wrote in the complaint.

Alibaba rejected the claim, saying: “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 co-operation. We believe this complaint has no basis and we will fight it vigorously.” The lawsuit, which was originally filed and then retracted last July, comes a month after Alibaba said it would tackle the problem of fake goods being sold on its websites.

The ecommerce company was criticised by the American Apparel & Footwear Association, which said it was “frustrated” with Alibaba’s lack of progress in addressing sales of counterfeit products on its consumer-facing Taobao platform. The AAFA said it was “notorious as one of the biggest platforms for counterfeit goods worldwide”. Alibaba has also been under pressure in China where the State Administration for Industry and Commerce, a Chinese regulator, has criticised it for counterfeit goods, as well as tolerating bribery and faking seller rankings.

Kering’s complaint includes examples of what it says are fake goods being sold on Alibaba’s platform. These include bags featuring the Gucci trademark selling in bulk at $2 to $5 per unit, compared with the $795 sale price of an authentic version. Shares in Alibaba were almost flat, up 0.7 per cent to $88.46 at the close of trading in New York on Friday.