Kering’s luxury brands have won an early victory in court in their fight against Chinese retailer, Alibaba over the claim that Alibaba sells fake goods on its website.
Back in May, Kering luxury brands including Gucci, Yves Saint Laurent, and Balenciaga, sued Alibaba in New York, claiming that trademark infringement and the sell of counterfeit goods on the Chinese retailer’s website.
This past week, these brands were granted their request for a temporary restraining order against several Alibaba vendors named in the suit. This is a huge win for these luxury brands because it means that the vendors must immediately cease the sale and distribution of the counterfeit goods on the Alibaba website.
In addition to this, these vendors must turn over their financial records to the court. U.S. District Judge P. Kevin Castel granted the restraining order based on the likelihood that Kering would be able to show that the vendors were selling counterfeit and knockoff goods.
The temporary restraining order means that Kering has a high likelihood of prevailing in their lawsuit against Alibaba, the crux of which is that they have to prove that the products sold are fake and are infringing on Kering’s brand’s intellectual property.
Alibaba exploded onto the e-commerce scene over the past two years. It had the biggest initial public offering when it went public at $25 billion on the New York Stock Exchange in 2014.
However, the sale of counterfeit products has always plagued Alibaba as many vendors use the platform to sell counterfeit luxury products in bulk for as low as $2 per product. The Chinese retailer has said that it has a zero tolerance policy towards counterfeit products.
Kering, however, is arguing that Alibaba has failed to police its vendors properly has overlooked and allowed them to sell fake products to consumers, thus hurting the value of Kering’s luxury brands.
It will be interesting to see if the case goes to court, or if Alibaba will attempt to settle out of court. Stay tuned…