On Wednesday, a U.S. judge declined Alibaba’s attempt to have a lawsuit dismissed concerning the purported sale of counterfeit editions of the popular children’s toy Squishmallows by several merchants on its online platforms.
U.S. District Judge Jesse Furman in Manhattan ruled that Kelly Toys, a subsidiary of Jazwares owned by billionaire Warren Buffett’s Berkshire Hathaway, had a credible claim. The claim asserted that Alibaba was aware of and actively involved in the infringement of copyrights and trademarks by various merchants, particularly in the sale of counterfeit versions of the popular children’s toy Squishmallows on its online platforms.
Kelly Toys highlighted that despite six prior legal actions aimed at halting the sale of counterfeits on Alibaba, the issue has endured. Alibaba, according to Kelly Toys, disregarded its own “three-strike” policies and even granted “Gold Supplier” and “Verified” status to certain merchants who were infringing on copyrights and trademarks.
Alibaba and legal representatives for the Chinese e-commerce company did not promptly respond to requests for comments. Furman refrained from making a judgment on the substantive aspects of the lawsuit.
In November 2022, Kelly Toys filed a lawsuit against approximately 90 merchants, alleging the sale of counterfeit Squishmallows, and secured an injunction two months later. In March, Alibaba was subsequently included as a defendant in the case.
In its attempt to secure a dismissal, Alibaba contended that Kelly Toys did not assert any involvement on Alibaba’s part in the infringements. Alibaba further argued that Kelly Toys was attempting to inappropriately transfer the responsibility of monitoring its intellectual property by advocating for “draconian” measures against sellers.
In April 2020, Jazwares acquired a majority stake in Kelly Toys. Subsequently, Berkshire Hathaway purchased Alleghany, the parent company of Jazwares, in October 2022. Jazwares reported a revenue of $847 million in the initial nine months of 2023.
The legal matter is identified as Kelly Toys Holdings LLC v. 19885566 Store et al, filed in the U.S. District Court for the Southern District of New York, under the docket number 22-09384.
