Gucci, Luxury Brands Sue Alibaba Over Counterfeits

May 18, 2015 Updated: May 19, 2015

NEW YORK—Gucci and other luxury brands owned by the Paris-based Kering Group are suing Alibaba in an effort to stem the counterfeit products sold through the Chinese giant’s ecommerce marketplaces.

The lawsuit, Gucci America Inc v. Alibaba Group Holding Ltd was filed in the U.S. District Court in Manhattan on Friday, May 15. It alleges that Alibaba’s marketplaces “knowingly encourage, assist, and profit from the sale of counterfeits on their online platforms,” according to a copy of the filing reviewed by The Wall Street Journal.

A company spokesperson said via email, “This lawsuit is part of Kering’s ongoing global effort to maintain its customers’ trust in its genuine products.”

According to Brian Buchwald, CEO of Bomoda and an expert on China’s retail space, Alibaba’s largest ecommerce site Taobao currently has 1859 unauthorized sellers of Gucci products, and approximately 85,700 unauthorized Gucci items. Many of these items are counterfeits that bear the Gucci trademark.

But the problem is not just Taobao, according to the lawsuit. Counterfeit Gucci products are available on Alibaba’s wholesale sites in bulk quantities, in some cases for less than one percent of the normal retail price.

The Kering Group had filed a similar lawsuit against Alibaba last July, only to withdraw it two weeks later in August as the two parties tried to work together to crack down on counterfeits.

Alibaba has been trying to get brands to buy into as an official channel to sell to Chinese consumers, versus Taobao, which is more like eBay. Alibaba promised to put more effort into policing its other sites for counterfeits for brands that signed on.

So far Burberry is one of the only luxury brands to join Tmall, according to Bomoda’s 2015 China Luxury Blueprint. Sales have apparently lagged through the platform, and Alibaba has not kept its word about policing Taobao. Currently, 64,500 unauthorized Burberry products are listed on Taobao, according to data obtained by Bomoda.

A Chinese government report released at the end of January also criticized Alibaba for not policing its sites for counterfeits more effectively. Chinese officials later retracted the report.