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IS ALIBABA IN HOT WATER?

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IS ALIBABA IN HOT WATER?

May 18 2015, 11.00am GMT

STOCK.com

The owner of some of the world’s most well-known luxury brands has filed a new lawsuit against Alibaba pertaining to counterfeit goods sold on its website.

The owner of Kering SA (EPA: KER), a Paris based luxury brand’s company, has filed a new lawsuit against the Chinese e-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA). This is the most recent challenge to the company’s assertion that it condemns counterfeit goods being sold on its e-commerce platform.

Kering SA, who owns brands like Gucci, Yves Saint Laurent and Balenciaga, filed the lawsuit on Friday in Manhattan’s federal court. The luxury brands group further said that they are not satisfied with the efforts Alibaba has shown to address the issue relating to counterfeiting of their brands.

According to a copy of the suit that The Wall Street Journal reviewed, Kering SA alleges that Alibaba Group Holding and its associated businesses knowingly encourage, assist with and make a profit from the counterfeit brands sold on their platform.

Alibaba in defense said that the complaint had no grounds and that the company has a solid track record of assisting brands in fighting counterfeiting.

The Alibaba spokesperson further stated that unfortunately the Kering Group chose to proceed with wasteful litigation rather than choosing constructive cooperation. Alibaba has made it clear that they believe the recent complaint has zero basis and that they will fight it strongly.

Interestingly, this is the 2nd time that the Kering Group has sued Alibaba. Last year July, a couple of months just before Alibaba was set to launch their IPO in the U.S., the luxury brands group filed a lawsuit similar to this one against Alibaba; however, they withdrew the case two weeks later.

At the time, both Alibaba & Kering together said that they will work on reducing the counterfeiting of Kering Group’s brands. In the most recent filing, Kering has now said that the previous claims made in July last year were now being reaffirmed.

There are some allegations amongst the lawsuits that Alibaba encourages and permits a number of counterfeiters to operate using its various platforms despite the merchants blatantly stating that the goods they are selling are fake.

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