Alibaba must face a lawsuit in the US over counterfeit Squishmallows. On Wednesday, a judge in the United States denied Alibaba’s (9988. HK) request to dismiss a case about the alleged sale of counterfeit copies of the popular children’s toy Squishmallows on Alibaba’s online platforms. The action concerned the purported sale of the item by multiple merchants.
According to District Judge Jesse Furman of the United States District Court for the District of Manhattan, Kelly Toys, whose parent company Jazwares is a subsidiary of Berkshire Hathaway (BRKa.N.), which Warren Buffett, a billionaire, controls, made a credible claim that Alibaba was aware of and assisted the merchants’ violation of its copyrights and trademarks.
Alibaba has ignored its own “three-strike” restrictions and awarded specific infringing merchants “Gold Supplier” and “Verified” status, according to Kelly Toys, which has led to the continued selling of counterfeit goods on Alibaba. Although six prior cases have been filed to halt the sale of counterfeit goods on Alibaba,
In response to demands for comment, neither Alibaba nor the attorneys representing the Chinese e-commerce business responded instantly. On the merits of the lawsuit, Furman did not make a decision.
Kelly Toys filed a lawsuit in November 2022 against over ninety retailers that it accused of selling counterfeit Squishmallows. Two months later, the company was successful in obtaining an injunction. In March, it included Alibaba as a defendant.
In its request for a dismissal, Alibaba stated that Kelly Toys had failed to prove that it had any participation in infringements and was attempting to inappropriately transfer the responsibility of protecting its intellectual property by exacting “draconian” procedures onto merchants.
Jazwares acquired a controlling share of Kelly Toys in April 2020. In October 2022, Berkshire acquired Alleghany, the parent company of Jazwares, an insurance holding firm. Over the first nine months of 2023, Jazwares generated a total revenue of $847 million.
With case number 22-09384, the United States District Court for the Southern District of New York is hearing the case of Kelly Toys Holdings LLC versus 19885566 Store et al.