Legal Battle Unfolds: Alibaba Faces Setback in Squishmallows Lawsuit
In a recent legal development, a U.S. judge delivered a blow to Alibaba’s attempt to dismiss a lawsuit centered around the alleged sale of counterfeit Squishmallows, a beloved children’s toy, on its digital platforms. Judge Jesse Furman in Manhattan ruled that Kelly Toys, the plaintiff, put forth a compelling argument suggesting Alibaba’s awareness and contribution to the infringement of copyrights and trademarks by various merchants on its platform.
The lawsuit, initiated by Kelly Toys in November 2022, targeted around 90 merchants accused of peddling counterfeit Squishmallows. Despite obtaining an injunction two months later, Kelly Toys added Alibaba as a defendant in March. The crux of the matter lies in the persistent issue of counterfeit sales on platform, even after six prior lawsuits aiming to curb this problem. Kelly Toys contends that Alibaba, in defiance of its own “three-strike” policies, went so far as to bestow “Gold Supplier” and “Verified” status upon some infringing merchants.
Its legal representatives have yet to respond to requests for comments. It’s crucial to underline that Judge Furman refrained from making a ruling on the lawsuit’s merits at this stage.
Alibaba Defense and Corporate Dynamics
Alibaba, in its bid for dismissal, argued that Kelly Toys failed to sufficiently demonstrate its involvement in the alleged infringements. The e-commerce giant further claimed that the plaintiff sought to unfairly shift the responsibility of intellectual property oversight by advocating for what it deemed “draconian” measures against sellers.
Adding complexity to the legal landscape is the corporate backdrop involving Kelly Toys, Jazwares, and Berkshire Hathaway. Jazwares, under Berkshire Hathaway’s ownership, acquired a majority stake in Kelly Toys in April 2020. Berkshire Hathaway, in turn, acquired Jazwares’ parent company, Alleghany, in October 2022. Impressively, Jazwares reported a robust revenue of $847 million in the initial nine months of 2023.
This legal saga, formally titled Kelly Toys Holdings LLC v 19885566 Store et al, unfolds in the U.S. District Court, Southern District of New York, under docket number 22-09384.
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