A recent development in the legal arena has thrown Alibaba Group Holding Ltd into the spotlight, as a U.S. judge rebuffed the company’s attempt to dismiss a lawsuit concerning the alleged proliferation of counterfeit Squishmallows on its online platforms. The ruling, delivered by U.S. District Judge Jesse Furman in Manhattan, contends that Kelly Toys, a subsidiary of Jazwares under Warren Buffett’s Berkshire Hathaway, has credibly asserted that Alibaba was aware of and contributed to the copyright and trademark infringement committed by various merchants.
Despite facing six previous lawsuits attempting to halt the sale of counterfeit Squishmallows on its platform, Alibaba allegedly continued to flout its own “three-strike” policies. Furthermore, it is claimed that the e-commerce giant granted “Gold Supplier” and “Verified” status to certain infringing merchants, disregarding the persistent violations.
Alibaba’s response to the allegations remains unreported, as the company, along with its legal representatives, has yet to provide comments on the matter. Judge Furman, in his recent decision, did not make a conclusive judgment on the merits of the lawsuit.
Kelly Toys initiated legal action against approximately 90 merchants in November 2022, accusing them of selling counterfeit Squishmallows. Two months later, an injunction was granted, and Alibaba was added as a defendant in March 2023.
In its bid for dismissal, Alibaba argued that Kelly Toys failed to demonstrate the company’s involvement in the infringements. Moreover, Alibaba claimed that Kelly Toys was attempting to shift the responsibility of enforcing intellectual property rights onto the platform, proposing what the company deemed “draconian” measures against sellers.
Jazwares, which acquired a majority stake in Kelly Toys in April 2020, saw its parent company, Berkshire Hathaway, purchase Alleghany, the insurance holding company that owns Jazwares, in October 2022. Notably, Jazwares reported total revenue of $847 million in the first nine months of 2023.
The case, officially titled Kelly Toys Holdings LLC v 19885566 Store et al, is currently before the U.S. District Court, Southern District of New York, under case number 22-09384. The unfolding legal drama between Kelly Toys and Alibaba adds another layer to the ongoing battle against counterfeit goods in the e-commerce landscape.
