In surprise move, Kering drops Alibaba lawsuit, announces “landmark” collaboration 03 Aug 17
A press release issued today has announced that Kering and Alibaba Group have signed a “landmark agreement” to cooperate in the protection of intellectual property and engage in joint enforcement activities. The shock move, by an organisation that has been highly critical of the e-commerce giant, brings to an end Kering’s headline-grabbing lawsuit against the Chinese company.
The jointly-issued release states: “French luxury group Kering, and Alibaba Group and its affiliate Ant Financial Services have come to a ground-breaking agreement to cooperate in their efforts to protect intellectual property and take joint enforcement actions online and offline against infringers in order to provide the best consumer experience and a trusted environment. The new partnership represents a milestone in both parties’ investment and efforts to protect brands’ intellectual property rights.”
Detail is scant on what this collaboration will entail, the press release saying only that “the companies have established a joint task force with the purpose of collaborating fully, exchanging useful information, and working closely with law enforcement bodies to take appropriate action against infringers of Kering’s brands identified with Alibaba’s advanced technology capabilities”.
The short press release makes numerous mentions of the deployment of “advanced technology” as part of the collaboration, with this the repeated mantra of Alibaba when expanding on how it will tackle counterfeits. Earlier this year, for instance, the Alibaba Group announced a Big Data Anti-Counterfeiting Alliance, noting that its anti-counterfeiting technologies scan as many as 10 million product listings a day. The release, which highlights that the two will work with law enforcement authorities, comes two days after Alibaba announced an expansion of its Cloud Sword Alliance programme, with 13 government bodies now signed up. As such, there is no suggestion that the partnership will entail new strategies – rather it seems to be a case of Kering signing up to existing Alibaba anti-counterfeiting programmes.
For many industry watchers the move (as part of which Kering has agreed to dismiss a lawsuit filed against Alibaba and Alipay in the US district court in New York) will be a surprise – albeit not one without precedent.
In July 2014 numerous brands under the Kering umbrella – including Gucci, Balenciaga and YSL – filed suit against Alibaba in a US federal court, claiming that Alibaba companies “knowingly make it possible for an army of counterfeiters to sell their illegal wares throughout the world”. Just 14 days later, Kering dropped the suit, announcing in a joint statement: "Kering and Alibaba have agreed to work together in good faith through the normal business process on ways to enhance intellectual property protection in a manner that can further reduce counterfeiting of Kering brands and ensures a healthy and vibrant e-commerce ecosystem for consumers, merchants and brand owners alike”.
That relationship apparently stalled because, in May 2015, companies falling under the Kering umbrella – including Gucci, Yves Saint Laurent and Balenciaga – filed a lawsuit alleging that the Alibaba’s online platforms “knowingly encourage, assist and profit from the sale of counterfeits”. The filing alleged that counterfeiters are permitted to continue to operate “even when the Alibaba defendants have been expressly and specifically informed that the merchants are selling counterfeits, and even when the merchants themselves state openly that they are selling counterfeits”. At the time of the filing, calling the accusations baseless, an Alibaba spokesperson said that Kering had “chosen the path of wasteful litigation instead of the path of constructive cooperation”.
In August 2016, the court dismissed part of the lawsuit – specifically two Racketeer Influenced and Corrupt Organizations Act claims. The rest of the suit progressed, with a request for an extension of discovery granted on May 5 2017. Today came the surprise announcement that the lawsuit had been dropped.
The release simply states: “As part of the agreement, Kering has agreed to dismiss the lawsuit filed against Alibaba and Alipay, an Ant Financial subsidiary, in the US district court in New York.” Beyond that, both parties are saying little. We reached out to Kering to ask for more detail on the nature of the collaboration and – given its previous strong words – what led to the decision that collaboration, rather than litigation, would be the most effective route to resolution. However, we were told that the company will not be making any additional comments. Similarly, Alibaba has told us it has no additional comment beyond what is in the press release.
Clearly there are legal dimensions at play here so for now the details of the collaboration remain a mystery. However, it is a significant coup for Alibaba, with a previously fierce critic being brought into its brand ally camp. For Kering, based on the release’s statement that “this agreement reflects the parties’ firm belief that taking proactive measures and using advanced technology will help law enforcement bodies and other relevant authorities address the challenges of intellectual property infringement”, their ‘win’ will be in anti-counterfeiting results. It will hope that this decision to drop a lawsuit in favour of collaboration will lead to a more longer-lasting partnership - and concrete results.
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