Alibaba has finally settled a long-standing lawsuit against it purporting that the big box retailer had kept its meeting with the Chinese government –concerning the counterfeit products in it’s site– secret before publicizing it in 2014.
The China-based eCommerce retailer later announced in an SEC briefing that settling the lawsuit “doesn’t include an admission that the allegations were true” and will “bring to a close all unsettled lawsuits against Alibaba.”
On to the specifics; the legal claims targeted Alibaba’s initial public offering (IPO) worth a whopping $25bn.
Word has it that the Chinese giant store had met the China’s State Administration for Industry and Commerce (SAIC) two months earlier and faced threats of hefty fines if it did not curb the sales of fake goods on its platform.
What followed were several lawsuits launched against the online retailer insisting it should should have publicized the matter prior to its IPO.
The multiple lawsuits then merged into one Federal Action suit back in 2015. A year later, in June, the US District Court in Manhattan threw away the allegations after finding that Alibaba had shown transparency in its IPO concerning regulatory risks, but some plaintiffs appealed the ruling.
In response to the situation, SAIC then released an official report that claimed less than 40% of the goods sold on Alibaba’s Taobao stores were authentic. The announcement triggered a significant drop in the retailer’s Nasdaq-listed shares –the opening price dropped to $68 from $189.
Alibaba: “The Claims had no legal basis”
Alibaba has maintained it’s grounds claiming that the SAIC report had no legal basis and was eliminated from its website on the same day it was published.
In a bid to deal with fake products, the Chinese retailer has rolled out a number of strategies to try to keep down the numbers of fake listings in it’s platforms, including launching the Alibaba Anti-Counterfeiting Alliance (AACA) that works with brands to enforce it’s crackdown operations.
USTR: Alibaba’s Anti-counterfeits efforts haven’t curbed the listing of fakes
Still, Alibaba’s Taobao featured in the latest US Trade Representative’s (USTR) list of the most Notorious Markets online which it claims are routinely breaching intellectual property (IP) rights.
According to the USTR’s April 25th report; “Though Alibaba is making moves to stop the listing and sale of fake products, market players particularly micro to medium retailers still report high volumes of counterfeits and problems in their takedown attempts.”
Infringing products remains a challenge in ecommerce with large retail platforms like Alibaba struggling to maximize profits while also weeding out bad players. Hopefully, Alibaba’s anti-counterfeits campaigns will protect it from lawsuits in the future.
Author bio: Electronic payments expert Blair Thomas is the co-founder of high risk payment processing company eMerchantBroker. He’s just as passionate about helping businesses get a high risk merchant account as he is with traveling and spending time with his dog Cooper.