Company Behind Gucci, Other Luxury Brands Suing Alibaba Over Claims Of Counterfeit Goods

Not a counterfeit dog. (Hammerin Man)

Fighting the rising tide of counterfeit goods is a constant battle for luxury brands, and a big priority if they want to stay in business. That’s why a French company behind luxury brands like Gucci, Balenciaga, Bottega Veneta and sportswear names like Puma is suing Chinese online marketplace Alibaba, claiming it’s making it easy for customers to buy counterfeit goods in bulk through its websites.

Kering Group and Alibaba had previously tried to come to a solution out of court, but it seems Kering wasn’t satisfied with that route, reports BBC News.

“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,” Alibaba said in a statement, saying it planned to fight the case and is already moving against fake goods. “Unfortunately, Kering Group has chosen the path of wasteful litigation instead of the path of constructive co-operation.”

Alibaba has been in hot water before over accusations that it enables illegal sales on its platform: In January, after the Chinese government accused Alibaba of taking bribes and selling counterfeit products, Alibaba pledged to step up its anti-counterfeit measures on its sites, including the eBay-esque Taobao.

Kering first took legal steps against Alibaba in July but dropped the case when the two sides decided to work together to tackle the counterfeit problem. That hasn’t worked out so well, it seems, as Kering filed its latest lengthy complaint with a New York City court.

In one example Kering gives, the company says Alibaba allowed a merchant to use Taobao to “openly sell” wholesale quantities of “obviously fake Gucci products.” Kering claims the merchant was peddling a branded Gucci handbag in a minimum of 2,000 in an order for $2-$5, while those bags are usually sold for $795 each.

Kering also points to watches that have a Gucci logo on them that show up when users search for “replica wristwatches.”

“[The merchant] sells its counterfeit watch for $10-$80 per piece,” the complaint states.”This seller requires a minimum purchase of 300 pieces per order and can supply up to 200,000 pieces per month. The authentic Gucci watch retails for $960.”

This is just a small slice of the problem pie, Kering claims.

“These specifically identifiable counterfeit products could not be sold without their assistance, but instead of shutting down the counterfeiters, the Alibaba defendants seek to profit from the counterfeiters’ blatant violations,” it states. “The Alibaba defendants knowingly assist these counterfeiters in virtually all aspects of their illegal operations.”

Alibaba maintains that it’s working hard to enforce a “zero tolerance policy” towards fakes.

“We conduct periodic checks by using third parties to identify suspected counterfeit products on our marketplaces,” said Joe Tsai, the firm’s vice-chairman said on a recent call with bank analysts. “[And] when we receive complaints or allegations regarding infringement for counterfeit groups, we follow well-developed procedures to take strict action. If allegations are posting or selling counterfeit products are substantiated, we penalize the parties involved through a number of means, including enforcing the seller to reimburse the buyer, assessing penalties against the seller by limiting their ability to add listings, adopting a name-and-shame policy and closing down store fronts and permanently banning the seller from establishing another store front.”

Gucci sues Alibaba over ‘counterfeit goods’ [BBC News]

by Mary Beth Quirk via Consumerist