Luxury group Kering, parent company to numerous global fashion brands including Gucci, Saint Laurent, and Bottega Veneta, is suing Alibaba. It’s accusing the world’s possibly largest online commerce company of encouraging rampant counterfeiting of its products through its “ecosystem.”
The suit, which Kering filed earlier this week in US district court in New York, pits two companies with very deep pockets in a contest that seems likely to have costly consequences for the loser. It’s also a direct shot at China’s gigantic counterfeiting market, which is estimated to produce nearly 70% of the world’s knock offs.
What Kering says is at stake is essentially the value of its brands. Exclusivity and brand cachet are critical parts of the perceived worth of a luxury product. Even if the person buying a knockoff Gucci bag isn’t generally the same customer buying an authentic one, a marketplace flooded with fakes and the resulting overexposure of the Gucci logo could taint perception of Gucci overall, causing customers who might have bought the real product to look elsewhere.
According to the suit, Alibaba.com and the sites AliExpress.com and Taobao.com, which Alibaba owns, create an environment that promotes counterfeiting. It states that Alibaba and its sites “facilitate and encourage the sale of an enormous number of Counterfeit Products through their self-described ‘ecosystem,’ which provides manufacturers, sellers, and buyers of counterfeit goods with a marketplace for such goods, and provides online marketing, credit card processing, financing, and shipping services that effectuate the sale of the Counterfeit Products.”
The suit is actually the second time Kering has taken Alibaba to court over counterfeits of its products. In July 2014, Kering filed its first suit against the Chinese e-commerce giant, but it withdrew the complaintthe next month after the two companies agreed to work together on the problem. The new suit suggests Kering wasn’t satisfied with Alibaba’s response.
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