ALIBABA QUOTE DEEPENS RIFT WITH LUXURY BRANDS

alibaba

Luxury brands and China-based e-commerce company Alibaba Group Holding Ltd. are in the midst of a spat over Alibaba’s intent to mediate.

The case originates from a May 20 complaint against Alibaba for allegedly encouraging the sale of counterfeited products on its platforms. On Sept. 25, Alibaba proposed that the parties enter into mediation.

The plaintiffs—including Gucci America Inc., Balenciaga S.A. and Kering S.A., a French holding company that owns Alexander McQueen among other luxury, sport & lifestyle brands—requested to withdraw from mediation after learning of a quote attributed to Alibaba CEO Jack Ma in the Nov. 23, 2015, issue of Forbes magazine that seemed to imply there was no chance of settling.

“I would [rather] lose the case, lose the money … But we would gain our dignity and respect,” Ma was quoted as saying. 

The plaintiffs interpreted this to mean that Alibaba’s mediation request was a bad-faith attempt to delay the case—and force them to expend significant resources. 

Alibaba denied the allegation—and said it was the other companies who want a long and costly battle.

In a Nov. 10 letter, Alibaba wrote that the plaintiffs’ termination of prior settlement discussions and rejection of several good-faith proposals showed that the luxury goods companies were unwilling to resolve the case through alternative dispute resolution.

“Plaintiffs’ preferred course appears to be a costly, multi-year lawsuit,” the letter said.

The New York federal district court, meanwhile, has urged the parties to proceed with mediation.

“It is fortunate that the parties’ representatives—both sides—have not served in high level diplomatic positions in key moments in history or many successful resolutions of disputed matters, including shooting wars, would never have been achieved,” said Judge Kevin Castel in a Nov. 9 order.

Alibaba said it still wants to proceed with mediation. We’ll keep watching the case and see if the plaintiffs can be persuaded as well.

UPDATE: The plaintiffs responded that, in light of the court’s order and Alibaba’s letter, they will move forward with the mediation process—even though they criticized the tone of the letter as “more in keeping with Mr. Ma’s statements to Forbes than with a party truly interested in settlement.”