A U.S. judge rejected Alibaba’s attempt to dismiss a lawsuit accusing it of enabling the sale of counterfeit Squishmallows on its platforms. U.S. District Judge Jesse Furman stated that Kelly Toys, backed by Warren Buffett’s Berkshire Hathaway, had plausible claims that Alibaba was aware of and contributed to copyright and trademark infringement.

Kelly Toys asserted that Alibaba allowed ongoing counterfeiting despite previous lawsuits and its own policies. Some infringing merchants even received “Gold Supplier” and “Verified” status. Alibaba and its legal representatives did not immediately respond to requests for comment.

The lawsuit, initiated by Kelly Toys in November 2022 against 90 merchants, resulted in an injunction two months later. Alibaba was added as a defendant in March. Seeking dismissal, Alibaba argued that Kelly Toys failed to show its involvement in infringements and attempted to shift the burden of intellectual property policing.

Jazwares, Kelly Toys’ parent company, acquired a majority stake in April 2020, and Berkshire purchased Jazwares’ parent, Alleghany, in October 2022. Jazwares reported revenue of $847 million in the first nine months of 2023.

While the judge did not rule on the lawsuit’s merits, the case signifies an ongoing legal battle as Kelly Toys strives to hold Alibaba accountable for alleged contributions to the sale of counterfeit Squishmallows.

The case is Kelly Toys Holdings LLC v 19885566 Store et al, U.S. District Court, Southern District of New York, No. 22-09384.

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