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Kering Sues Alibaba Again

In recent times, counterfeit items have become a large problem for many designer luxury brands. With the rapid growth of e-commerce, counterfeiters have moved their products from the streets to the Internet. This creates a problem for designer luxury brands because it is not easy for counterfeit items to be sold before their eyes. The sale of counterfeit items can affect everything from sales, to reputation, to good will. Many designer luxury brands are players in the fashion industry. The fashion industry, however, is a fickle one. One day you are in, the next you are out. The biggest asset a designer luxury brand can have is its status. Once the brand starts to lose its status in the industry, it is difficult to recover.

Protection of intellectual properties against unfair competition has become a constant battle for designer brands. The latest battle comes between French luxury company, Kering, and Chinese e-commerce giant, Alibaba. Kering luxury brands include, Gucci, Yves Saint Laurent, and more. In May 2015, Kering filed a lawsuit against Alibaba for encouraging and profiting from sales of counterfeit items on its website. This lawsuit, however, is the second legal action between the two parties. The first lawsuit was filed in July 2014 with similar causes of action. The lawsuit was retracted when Alibaba promised to work towards stricter intellectual property protections. However, Kering became frustrated with the lack of progress and filed the second lawsuit in 2015.

In its complaint, Kering alleges that Alibaba encourages counterfeiting on its platforms by allowing keywords such as “replica” and “guchi” to lead to counterfeit items. The complaint alleges Alibaba fosters the sales and purchase of counterfeit goods by providing a platform for such transactions. Alibaba, however, argues the lawsuit is frivolous and claims that it works with luxury brands to help protect their intellectual property.

In June 2015, founder and chairman of Alibaba Group, Jack Ma, reinforced the company’s response towards Kering’s complaint. In an address to the Economic Club of New York, Ma expressed his intention to fight the lawsuit. When asked about a possible settlement, Ma was quoted saying: “I would [rather] lose the case, lose the money, than settle. But we would gain our dignity and respect.” Here, Ma indicates that he does not intend on reaching a settlement with Kering and will fight the suit in court, regardless of Alibaba’s chance of success.

Although, Ma publicly expressed his intention to fight the case in court, mediation efforts between the two parties continued on after a “strong recommendation” from the trial judge. The strong recommendation came as a result of Kering asking the court to relieve the mediation requirement since the efforts would not be futile. The court recognized public comments could undermine negotiations and mediation, but outcomes have been known to vary. Alibaba expressed support for the continued mediation efforts and Kering has yet to publicly respond. Mediation efforts have continued and the current standing of the mediation is unknown to the public.

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