By Rob Bates
Kering, the French luxury conglomerate that owns brands such as Gucci and Ulysse Nardin, has filed suit against Chinese e-commerce giant Alibaba, claiming it knowingly encourages and profits from the sale of counterfeits over its platform, in particular: Gucci watches.
The suit, filed May 15 in Southern District of New York federal court, charges that the China’s largest e-tailer—which, like Etsy and eBay, stocks very little product itself but hosts listings from third-party sellers—openly lets hundreds of counterfeiters peddle illegal copycats.
This is the second suit Kering has filed against Alibaba. On April 14, 2014, it filed a similar suit, but it was dropped after the two parties agreed to work together.
“That has not been the case so far,” says a Kering spokesperson, explaining why hostilities have been resumed.
An Alibaba spokesperson told other news sources that the complaint was without merit and added: “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 cooperation.”
The suit charges Alibaba with trademark infringement, trademark dilution, and even violations of the RICO Act. It seeks unspecified damages.
Among the charges:
- One merchant that has “gold supplier” and “assessed supplier” status openly sells fake Gucci handbags, and another openly sells fake Gucci watches.
- When consumers type in the word replica in the Alibaba search bar, the word watches appears.
- The company sells the search term replica to sellers of counterfeits, as well as soundalike terms like guchi that steer people to fakes.
- As of June 2014, there were at least 697 sellers of “Gucci” products on Alibaba site Taobao that boastfully sold ersatz watches, as well as 707 phony sellers of Kering brand Bottega Veneta.
It further charges that even when Alibaba has been informed these listings are counterfeits, it often takes five days to remove a product.
When JCK hunted for replica watches this morning, nothing popped up. However the term replica watches luxury branded provided a bounty of unabashed fake timepieces, including this one, this one, and this one. While most are cagey about the brands they are replicating, one listing calls its watches “rolexable.” (UPDATE: Those listings have been removed.)
The case will likely be decided based on ruling in the long-running Tiffany vs. eBay case, which held the burden of selling counterfeit goods is mostly on the brand, provided the seller took measures to prevent listing by fakes.
In January, Alibaba acquired a stake in Israeli company Visualead.
Shortly after the suit was filed, the duo announced a venture that might stop counterfeiting: A new device that will allow manufacturers to put QR-like code on every product. If a counterfeiter tries to fake the code, it will not only be detected, but give investigators clues to their location.
The codes are currently being used on drinks and agriculture, it said.