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Alibaba sues counterfeit watch sellers

Chinese e-commerce giant Alibaba is suing two vendors who sold fake Swarovski watches on its Taobao platform in what it says is the first instance of an e-commerce platform taking a counterfeiter to court in China.06 Jan 2017

Alibaba lodged a case in the Shenzhen Longgang People’s district court against sellers Liu Huajun and Wang Shenyi, seeking 1.4 million yuan ($201,320) for "violation of contract and goodwill", it said in a statement.

The company used its own data to identify counterfeit products and to locate the vendors, it said, and "mystery shopping" to surreptitiously buy the products. Swarovski staff then examined the quality, workmanship and packaging of the samples, it said.

Police in Shenzhen’s Luohu District then seized 125 fake Swarovski watches and two counterfeit Swarovski official seals, with an estimated total value of 200 million yuan.

Jessie Zheng, Alibaba Group’s platform governance officer said: "Selling counterfeits not only violates our service agreement, it also infringes on the intellectual property rights of the brand owner, puts inferior products in the hands of consumers and ruins the hard-earned trust and reputation Alibaba has with our customers."

Alibaba plans to take further vendors to court in the hope that fines and jail sentences will "remove any incentive for counterfeit sellers to try again", it said.

Swarovski said that it "has cooperated with Alibaba on cases against sellers who are offering Swarovski counterfeits on Alibaba platforms and applauds any steps Alibaba takes to discourage counterfeiters from selling on Alibaba platforms".

The court case follows a larger anti-counterfeit crackdown in Zhejiang province last year. Acting on leads provided by Alibaba, Chinese authorities shut down 417 production lines, arrested 332 suspects and seized fake goods valued at 1.43 billion yuan, Alibaba said.

Hong Kong based Paul Haswell of Pinsent Masons, the law firm behind Out-Law.com said: "Alibaba’s intentions are the most interesting thing here – are they doing this because they are concerned about their brand and have finally decided to get tough with counterfeiters, or are they doing it because they are under pressure from brands in the West? I suspect there’s an element of both, but whatever the case they have an arduous task ahead since both Taobao and Alibaba have hundreds if not thousands of counterfeit watches and other goods for sale."

Alibaba appointed anti-counterfeiting expert Matthew Bassiur at the end of 2015 to lead a team working with international brands and retail partners, industry associations, government regulators and law enforcement organisations to fight counterfeiting.

Bassiur joined from Pfizer where he oversaw counterfeiting operations, Alibaba said. He previously worked for Apple as senior director for IPR enforcement, and as a federal prosecutor in the computer crime and intellectual property section of the US Department of Justice.