The battle between luxury goods company Kering and Alibaba, the world’s largest e-commerce company, will still go to mediation despite Kering’s request to a US District Court last week to waive the obligation of mediation. Kering had asked Judge Kevin Castel to relieve it from the mediation obligation following the publication of comments in Forbes magazine by Jack Ma where he stated that he would rather lose the case than settle. Kering said it was “greatly troubled” by Ma’s comment given that Alibaba had requested the mediation in the first place.
Kering owned Gucci had filed the lawsuit in question against Alibaba in New York in May of this year, claiming that Alibaba “provides the marketplace advertising and other essential services necessary for counterfeiters to sell their counterfeit products to customers in the United States.” This is the second time Kering has sued Alibaba. A similar suit was filed in 2014 only for it to be withdrawn weeks later following what Kering called a ‘constructive dialogue’ with Alibaba chiefs.
Following Kering’s request to the court last week, Judge Castel has asked both sides to reconsider mediation and also urged both companies to refrain from the public comments on the lawsuit. “The Court strongly recommends that the parties proceed to mediation,” he wrote.
Both companies have now confirmed that they will follow Judge Castel’s direction and continue in good faith to mediation.
Alibaba claims that it takes the battle against counterfeits very seriously . “I strongly believe that spending money on lawsuits could result in a completely different outcome than cooperating with us,” the head of security and anti-counterfeiting said in an interview with Reuters when the Kering lawsuit was initially filed. The company already employs over 2000 staff and spent over 100 million Yuan fighting fake goods in the last year but it’s an uphill struggle for Alibaba. Jack Ma has previously referred to the counterfeit goods industry infiltrating his company as a ‘cancer’. However, despite Alibaba’s claims that it is doing everything in its power to fight fakes, the Chinese government don’t agree. In a report released earlier this year by the State Administration of Industry and Commerce (SAIC), Alibaba was accused of being ‘far too lax’ and failing to adequately police its market place. In July of this year the American Apparel & Footwear Association (AAFA), announced that it had sent a letter to Jack Ma, asking that Alibaba “begin addressing counterfeits in a manner that is transparent, comprehensible, and fast.” AAFA President Juanita Duggan stated that she was writing the letter after “years of unproductive conversations with the Alibaba Group”. She asked that Alibaba remove counterfeits quickly at the request of certified brands and that “the process contain four critical elements: easy brand certification, brand-controlled ‘take-downs’, brand-approved sales, and a transparent verification process with results made public.”
Will mediation be successful or is Ma just wasting time? More to come on this one!