February 23, 2024

According to a Reuters report, Alibaba is facing a suit in the United States in line with the ruling of a judge in Manhattan. Essentially, the judge has rejected the firm’s attempt to dismiss a lawsuit regarding the sale of fake Squishmallows on its online platforms.

Notably, this legal battle first surfaced on November 22 when Kelly Toys, a toymaking firm owned by Berkshire Hathaway, filed a lawsuit against approximately 90 merchants, accusing them of a similar act.

Judge Denies Alibaba’s Lawsuit Dismissal

The filing from Kelly Toys asserted that Alibaba was fully aware of the copyright and trademark violations by several merchants. Beyond that, the firm claims that Alibaba also participated in the act, showing its total compliance with the merchants.

Kelly Toys further reflected on six previous lawsuits, which Alibaba is currently facing, stating that the company should be more mindful of its three-strike policies given such an unfavorable condition.

The case even delves deeper with Alibaba granting some statuses, including Gold Supplier and Verified, to some of the merchants who were involved in the trademark and copyright violation.

As the case piled up, Alibaba argued that Kelly Toys didn’t prove the company’s direct involvement in the infringements. They also contended that the accuser was trying to avoid the responsibility of controlling intellectual property, which is evident in how they propose strict measures against sellers.

Meanwhile, Alibaba and its legal representatives have yet to respond to requests for comments. Also, the judge has not made a final decision on the merits of the lawsuit.

Alibaba Deals with Similar Case in Q1 2023

Alibaba has been under the radar of the United States court even before the current case. A notable scenario surfaced in March 2023 when U.S. Judge George Daniels determined that the company would face the court regarding its business practices.

While the judge ruled that Alibaba must confront claims of defrauding shareholders concerning its alleged monopolistic practices, he simultaneously dismissed certain aspects of the case. 

Notably, the claims related to a shelved initial public offering (IPO) for Alibaba’s affiliate, Ant Group, were among those dismissed.

Furthermore, the lawsuit brought by shareholders asserted that Alibaba concealed regulatory concerns surrounding the IPO of Ant Group, particularly concerning the Alipay mobile payment platform.

The IPO, with an estimated value of around $37 billion, faced obstacles in 2020 when Chinese authorities intervened, leading to its cancellation.

Importantly, Judge Daniels clarified that shareholders lacked standing to sue over the Ant Group matter since the IPO did not materialize, preventing any buying or selling of Ant shares.

However, the judge allowed the shareholders to proceed with their claims against Alibaba, focusing on allegations regarding its monopolistic practices and unfair competition.

This legal development came amidst increased scrutiny of major tech companies in the United States and abroad over issues concerning antitrust matters and market competition.

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