Apparel Group: Alibaba Not Doing Enough on Counterfeit Goods

Alibaba’s quick growth as an enabler of mass-scale online commerce, especially in Asia, hasn’t always sat well with the clothing industry. And a lawsuit this week was a good reminder of why.

On Friday, Kering—the Paris-based parent company of a number of major clothing makers—sued Alibaba Group, accusing the firm of profiting from counterfeit goods by allowing their sale on its website. The lawsuit by the owner of Gucci and Alexander McQueen notes that it’s fairly simple to find a fake alternative to its high-priced brands by misspelling the names of the companies.

“This lawsuit is part of Kering’s ongoing global effort to maintain its customers’ trust in its genuine products and to continue to develop the creative works and talents in its brands,” the company said in a statement on the lawsuit.

Kering’s suit comes about a month after the American Apparel & Footwear Association (AAFA) sent a letter to U.S. Trade Representative Michael Froman, arguing that Alibaba hasn’t done enough to solve the ongoing problem—even as it’s worked directly with Alibaba to tackle these issues.

“For much of the past year, AAFA has been working with representatives of Alibaba to address these concerns,” AAFA President and CEO Juanita Duggan wrote  (opens in a new tab) [PDF]. “Although Alibaba has publicly accepted several of the concepts we’ve discussed, including an updated take-down system, a ‘trusted reporter program,’ and an increased focus on physical raids and law enforcement cooperation, implementation has been sluggish or non-existent.”

This sluggishness and slow response was part of the reason for the Kering lawsuit. The company actually sued Alibaba last year  (opens in a new tab), but then withdrew the suit as a result of “constructive dialogue” with the Chinese e-commerce giant, which is traded on the New York Stock Exchange.

“What is damaging is the perception that Alibaba has made so little progress in nearly a year that the brands decided rather than continuing discussions, they would sue—again,” Fortune writer Scott Cendrowski noted  (opens in a new tab).

In a press conference covered by The Associated Press, Alibaba founder Jack Ma emphasized that the company hoped to collaborate with Kering and the apparel industry in general, rather than fighting against them in court.

“We express regret about the company’s choice to sue us and not to cooperate with us to fight against counterfeit goods,” he said, according to the AP  (opens in a new tab).

The company made a similar statement in regards to AAFA’s letter, according to the Financial Times  (opens in a new tab) (subscription).

Jack Ma, left, the founder of Alibaba. (UKTI/Flickr)