Kering Dismisses Lawsuit Against Alibaba as Part of New Partnership -- Update

By Matthew Dalton in Paris and Liza Lin in Shanghai Features Dow Jones Newswires

Luxury conglomerate Kering Co. has agreed to dismiss a lawsuit against Chinese e-commerce giant Alibaba Group Holding Ltd. as part of a new deal between the two companies to fight counterfeit goods sold on Alibaba's websites.

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The lawsuit, filed by Kering in U.S. District Court in New York in 2015, accuses Alibaba of conspiring with Chinese merchants to sell knockoffs of Kering's brands, which include Gucci, Saint Laurent and Bottega Veneta.

Thursday's announcement is part of a continuing rapprochement between the luxury industry and China's e-commerce companies. The industry is cautiously agreeing to sell some brands through these online platforms, pushing aside past concerns about China's unruly counterfeiting industry using these websites to peddle high-end fakes.

Saint Laurent this week said it would sell over the internet in China for the first time through a partnership involving JD.com, China's second-largest online retailer.

LVMH Moët Hennessy Louis Vuitton SE, the world's largest luxury conglomerate, earlier this year agreed to open an online shop for its watch brand TAG Heuer on one of Alibaba's websites. LVMH chose JD.com to host its online store for cosmetics retailer Sephora.

Under the agreement announced Thursday, Kering and Alibaba will set up a "joint task force" to exchange information and work with law enforcement to pursue counterfeiters of Kering's brands. The companies said they would identify merchants selling counterfeit goods using Alibaba's "advanced technology capabilities."

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"The new partnership represents a milestone in both parties' investment and efforts to protect brands' intellectual property rights," the two companies said in a statement.

The luxury industry has been eager to sell online in China to capture growth in one of the world's biggest markets for high-end goods. But concerns and clashes over counterfeits have slowed cooperation between the industry and China's internet retailers.

Alibaba, which runs two of China's most popular online retail sites, Taobao and Tmall, has been making a big push to form alliances with Western brands and work with law enforcement to clean up fakes on its platforms in recent months. Since its Taobao site, which connects individuals and small- and medium-size merchants with buyers, was reinstated on a U.S. government list of "notorious" marketplaces for fakes in December, Alibaba established an advisory board of brands including Louis Vuitton and Samsung to help it improve intellectual-property protection.

The U.S. Trade Representative's office said it put Taobao back on the list last year due in part to "the challenges right holders experience in removing and preventing illicit sales and offers of such goods." The list, which includes file-sharing platform The Pirate Bay and physical marketplaces such as Beijing's Silk Market, names and shames those that are seen as not doing enough to fight counterfeiting and piracy.

The deal with Kering should help Alibaba attract more luxury brands to sell on its platform. As incomes rise in China, more Chinese consumers are demanding high-end products, and going online to buy them. JD.com, Alibaba's biggest rival, bought a stake in luxury brand retailer Farfetch.com Ltd., which hosts 200 luxury brands on its platform, for $397 million in June. Alibaba, whose marketplace apps attract more than 500 million monthly active users, said Tuesday it would be creating a luxury pavilion on its business-to-consumer Tmall consumer for select brands including Burberry and Hugo Boss.

Write to Matthew Dalton at Matthew.Dalton@wsj.com and Liza Lin at Liza.Lin@wsj.com

(END) Dow Jones Newswires

August 03, 2017 12:20 ET (16:20 GMT)