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U.S. District Judge Jesse Furman in Manhattan said Kelly Toys,
whose parent Jazwares is owned by billionaire Warren Buffett's
Berkshire Hathaway, plausibly alleged that Alibaba knew about
and contributed to the merchants' infringement of its copyrights
and trademarks.
Kelly Toys said the sale of counterfeits on Alibaba has
persisted despite six earlier lawsuits to stop it, with Alibaba
ignoring its own "three-strike" policies and awarding some
infringing merchants "Gold Supplier" and "Verified" status.
Alibaba and lawyers for the Chinese e-commerce company did not
immediately respond to requests for comment. Furman did not rule
on the lawsuit's merits.
Kelly Toys had in November 2022 sued about 90 merchants it
accused of selling counterfeit Squishmallows, and obtained an
injunction two months later. It added Alibaba as a defendant in
March.
In seeking a dismissal, Alibaba said Kelly Toys failed to allege
it had any involvement in infringements, and was trying to
improperly shift the burden of policing its intellectual
property by requiring "draconian" measures against sellers.
Jazwares bought a majority stake in Kelly Toys in April 2020.
Berkshire bought Jazwares' parent, the insurance holding company
Alleghany, in October 2022. Revenue at Jazwares totaled $847
million in the first nine months of 2023.
The case is Kelly Toys Holdings LLC v 19885566 Store et al, U.S.
District Court, Southern District of New York, No. 22-09384.
(Reporting by Jonathan Stempel in New York)
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