A Manhattan federal judge has green-lighted legal action against global retail giant Alibaba for allegedly allowing the sale of imitation Squishmallows. The plush toy, a favorite among children, is at the center of a copyright and trademark dispute spearheaded by Kelly Toys, a subsidiary of Jazwares—now under the umbrella of Warren Buffett’s Berkshire Hathaway.
Despite Alibaba’s attempt to dismiss the case, Judge Jesse Furman highlighted credible accusations that the company may have turned a blind eye to the infringement activities of several vendors. These allegations come after Kelly Toys’ continued battle, marked by six prior lawsuits, against counterfeit sales on Alibaba’s platforms.
The persistence of fake Squishmallows sales, coupled with Alibaba’s alleged disregard for its own ‘three-strike’ rule, has raised questions. The platform’s recognition of some infringing sellers as “Gold Supplier” and “Verified” has only added fuel to the fire.
Alibaba’s defense argued for dismissal, citing a lack of direct involvement in the infringements and an unfair expectation to enforce intellectual property rights. However, this defense did not sway the court, and Alibaba’s response to the ruling is pending.
The legal skirmish follows Kelly Toys’ November 2022 action against approximately 90 merchants for selling the counterfeits, leading to an injunction by January. With Alibaba joining the fray in March, the stage is set for a landmark intellectual property showdown.
Jazwares’ financial stakes, with a reported revenue of $847 million in the first nine months of 2023, underscore the high stakes of protecting its prized Squishmallow brand.
