Ali baba and the forty thieves

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LOCATION: MANHATTAN

A case about Alibaba Group Holding vs. Kering SA

In the Arabian tale Ali Baba and the Forty Thieves, part of the famous story collection One Thousand and One Night, Ali Baba is a poor woodcutter who discovers a hidden thieves´ den. The thieves finds out that the poor woodcutter knows their secret about the stolen goods & decides to go after him...

In today´s case the giant e- commerce actor Alibaba Group Holding Ltd. has lost a trademark infringement- case against the luxury good supplier Kering SA, which brands include e.g Gucci, Saint Laurent, Yves Saint Laurent, Stella McCartney, Alexander McQueen, Christopher Kane and many more. 

The 13th of August a New York district Court ordered, to Kering SA´s benefit, Alibaba to restrain the vendors acting on the Alibaba e- commerce sites, from selling fake goods. The Alibaba Group can be compared with e.g eBay, allowing actors to trade goods on their site.

By this judgement, it was stated that Alibaba had committed trademark infringement on Kering SA´s many luxury brands such as e.g Gucci. This, by facilitating the trade of counterfeit goods on their e- commerce platform. 

Gucci is the italian luxury brand with a trademark that many people, fashion- interested or not, might recognize. Kering had, in this case, claimed that fake- bags with the Gucci trademark was sold on an Alibaba website for as little as 2 USD while the authentic bags had a price at 795 USD. Since it was claimed that Alibaba had failed to stop their vendors from selling these goods on their online platform, this constituted a trademark infringement. 

So, trademark infringement and fake goods once again. But, what makes this case special? Well, what is most interesting is the fact that this judgement states that Alibaba have committed trademark infringement by facilitating other actors to sell fake goods. This is another form of infringement called Contributory Liability for Trademark Infringement.

Through a legal perspective, one say that online retailers, such as Alibaba or eBay, can be considered as middle- actors in the trade- contract between the providers (vendors) and the customers. It means that, even though it is third- parties that sell goods on their sites (the vendors), eBay and Alibaba are the middle- step which means that they have offered this service for vendors to sell online. It is not Alibaba, even though it might appear like that for the customers, who sell the goods – it is the third parties (the vendors).

There are several cases, both in Europe and the U.S, where the courts have imposed online- retailers contributory liability for trademark infringement. (E.g this relevant case and C‑324/09 – L´Oréal vs. eBay, EU) In practice it means that, a bit modificated, even though it is not you who have manufactured fake- goods, you still risk to be the only one responsible if you e.g run a e- commerce site such as Tradera, eBay or Alibaba, where counterfeit goods are being traded with.

Due to these cases, an advice for online retailers might be to undertake measures to ensure that no fake- goods are being traded with on their websites. Otherwise there is a risk to be claimed of being responsible for this type of trademark infringement. This is important to know, because it is of my belief that retail actors on the internet might not be aware of this matter and risk to be sued because of other´s acts.

In the Arabian tale, Ali Baba was in danger because of knowing about the thieves´ acts of stealth. In this case, Alibaba Group Holding were convicted in court, because of knowing about the vendors´ acts of trademark infringement.

It is to be continued, if the latter kind of cases will be repeated within a thousand and one nights, or not.

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