US Judge Dismisses Part of Alibaba Counterfeit Goods Lawsuit

A US judge on Thursday dismissed part of a lawsuit filed last year by Gucci, Yves Saint Laurent and other luxury brands accusing Chinese e-commerce company Alibaba Group Holding Ltd of promoting the sale of counterfeit goods.

US District Judge Kevin Castel in Manhattan dismissed racketeering claims asserted by brands owned by Paris-based Kering SA , saying their complaint failed to allege facts that could sustain those claims.

The lawsuit claimed Alibaba and 14 companies selling counterfeit goods on its online marketplaces joined to form an enterprise that sought to profit from items such as a knock-off Gucci handbag that sold for $18.99 rather than $1,250 (roughly Rs. 83,518).

Castel ruled the lawsuit failed to allege the existence of such an enterprise under federal racketeering law as it did not establish the merchants were aware of each other or that Alibaba could have agreed to carry out actions with them.

“The fraud perpetrated by each merchant defendant could be accomplished without any assistance from any other merchant defendant,” he said.

The ruling did not affect various other trademark-related claims in the lawsuit against Alibaba, which had not at this time sought to dismiss the other parts of the lawsuit.

Alibaba in a statement said that it was pleased with the court’s decision.

Kering did not respond to a request for comment.

Alibaba has been dogged for years by allegations that its online shopping sites are riddled with fake or otherwise copyright-infringing goods.

The company has said that it is constantly improving its monitoring and enforcement of rules against counterfeits.

The case is Gucci America Inc et al v. Alibaba Group Holdings Ltd et al, U.S. District Court, Southern District of New York, No. 15-03784.

© Thomson Reuters 2016