By A U.S. judge declined Alibaba’s request to dismiss a lawsuit accusing the platform of enabling the sale of counterfeit Squishmallows, a popular children’s toy, by various merchants on its online marketplace.
Judge Jesse Furman in Manhattan ruled that Kelly Toys, under Jazwares, a company owned by Warren Buffett’s Berkshire Hathaway (BRKa.N), had valid claims suggesting Alibaba was aware of and contributed to copyright and trademark infringement by these merchants.
Allegations state that despite prior legal actions (six lawsuits) to halt the sale of counterfeits, Alibaba continued to permit the activity, disregarding its own enforcement policies. Additionally, some infringing merchants were granted “Gold Supplier” and “Verified” statuses.
Alibaba and its legal representatives from the Chinese e-commerce giant have yet to comment on the matter. Judge Furman refrained from making a ruling on the lawsuit’s substance.
In November 2022, Kelly Toys initiated legal action against around 90 merchants for selling fake Squishmallows and secured an injunction two months later. Subsequently, Alibaba was included as a defendant in March.
Alibaba sought dismissal by claiming Kelly Toys hadn’t established its involvement in the infringements and was attempting to unfairly shift the responsibility of safeguarding intellectual property by imposing stringent measures on sellers.
Jazwares acquired a majority stake in Kelly Toys in April 2020. Berkshire Hathaway, in October 2022, purchased Alleghany, Jazwares’ parent company. Jazwares reported a revenue of $847 million in the initial nine months of 2023.
