The Alibaba Group (NYSE:BABA) has sued two vendors from China, saying they were selling counterfeit Swarovski watches on the Taobao online shopping site of Alibaba. The largest e-commerce business worldwide, Alibaba has lodged the cases in the Shenzhen Longgang People’s District Court.
This is the first time they have taken legal action against fake products, amid continuous allegations that hundreds of fake goods are on sale at their websites. This is also the first time a counterfeit maker is being taken to the court in China.
It took Alibaba just two weeks after the United States Trade Representative office added Taobao to the “notorious marketplaces” list for violating intellectual property rights. The Jack Ma owned company reacted by saying that the decision was politically motivated. “Unfortunately, the USTR’s decision leads us to question whether the USTR acted based on the actual facts or was influenced by the current political climate”.
However, they did take note of the complaints and decided to file the lawsuit. Alibaba is claiming damages of 1.4 million Yuan or $201,671 for goodwill and contract violations.
Alibaba Wants To Protect Their Name
The Chief Platform Governance Officer issued a statement saying, “We want to mete out to counterfeiters the punishment they deserve in order to protect brand owners”. He added that these lawsuits should deter other vendors from selling counterfeit goods on their websites. This essentially means that Alibaba (NYSE:BABA) is accepting the USTR claim, which they previously denied.
Alibaba Files a Police Complain
First, the company initiated a “test-buy purchase program” to confirm that the Swarovski watches the vendor was selling was a fake. Once sure, a complaint was lodged with the Shenzhen Luohu District police, who then raided the premises of the vendors. More than 125 fake Swarovski watches that are worth close to 2 million Yuan were confiscated. The second counterfeit Swarovski vendor was identified during the raid.
Alibaba’s Chief Platform Governance Officer reiterates their commitment to fight fake goods. They have already employed 2,000 full-time workers who are combating counterfeits. There are 5,000 volunteers too, helping the business root out the fakes. However, critics have said there are thousands of counterfeit products on their websites. Alibaba is assuring that this is just the start. Many more raids and lawsuits might follow.
Names of the two offending vendors, though, were not disclosed. Swarovski did not comment on this raid and lawsuit.