Alibaba Group can now breathe a sigh of relief. On Thursday, a U.S. judge dismissed part of a lawsuit against the Chinese firm for allegedly assisting in the sale of counterfeit goods. The case against the Chinese e-commerce giant was brought by luxury brands such as Yves Saint Laurent, Gucci and others in 2015.
Several accusations against Alibaba
The lawsuit filed by the luxury brands accuses the e-commerce company and 14 other companies of selling counterfeit products on their online marketplaces. Also the lawsuit claims that the companies formed a joint enterprise to get more profit from the sale of counterfeit products. For example, a copy of a $1,000 Gucci bag was being sold on the online platforms for just $18.99, according to the suit.
The lawsuit also alleges that Alibaba’s search engine suggests terms like “guchi” and “cucchi” when “Gucci” is typed into the search bar. The lawsuit filed last year says that this directs consumers to sellers of fake merchandise, and the Hangzhou-based company makes profits from the sales of such keywords.
The brands are seeking a court order to prevent the Chinese e-commerce giant from participating in the marketing, distribution and sale of counterfeit products. Also the luxury brands are seeking damages based on sales or profits from the products.
Other trademark-related claims still remain
Kevin Castel, a U.S. District Judge for the Southern District of New York, dismissed the claims, saying the petitioners have not provided enough facts to back up their claim. In the decision, Castel said that under the federal racketeering law, the existence of such an enterprise was not proven as the complainants were unable to establish that Alibaba carried out actions with the merchants or that the merchants were aware of each other.
Reuters reported him as saying, “The fraud perpetrated by each merchant defendant could be accomplished without any assistance from any other merchant defendant.”
Other trademark-related claims against Alibaba Holdings are not affected by Castel’s ruling. Alibaba, which was pleased with the decision, said it is trying to strengthen its monitoring and enforcement of rules to keep counterfeits from penetrating the online market. For years, the Chinese firm has been dogged by allegations that its platforms are riddled with fake or otherwise copyright-infringing goods.
The International Anti-Counterfeiting Coalition (IACC) suspended the membership of the China-based online company in May after famous luxury brands like Tiffany & Co., Michael Kors and Gucci withdrew from the Washington, D.C., coalition in protest against the inclusion of Alibaba.