China's Alibaba must face a US toymaker's lawsuit over sales of allegedly fake Squishmallows

A shareholder leaves the Squishmallows booth with a large bag of purchases in the exhibition hall of the Berkshire Hathaway annual meeting on Saturday, May 6, 2023, in Omaha, Neb. A judge in New York has ruled that Alibaba must face a lawsuit by a U.S. toymaker alleging that the Chinese ecommerce giant’s online platforms were used to sell counterfeit Squishmallows. (AP Photo/Rebecca S. Gratz, File)

The Alibaba logo is seen outside a building in Beijing on Nov. 16, 2021. A judge in New York has ruled that Alibaba must face a lawsuit by a U.S. toymaker alleging that the Chinese ecommerce giant's online platforms were used to sell counterfeit Squishmallow. (AP Photo/Ng Han Guan, File)

A judge in New York has ruled that Alibaba must face a lawsuit by a U.S. toymaker alleging that the Chinese ecommerce giant’s online platforms were used to sell counterfeit Squishmallows.

Judge Jesse Furman of the Southern District Court of New York refused Alibaba’s request to dismiss the case filed by Kelly Toys Holdings, which makes the popular plush toys.

Kelly Toys is owned by Jazwares, a toy company whose parent company Alleghany Corp. is controlled by billionaire Warren Buffett’s Berkshire Hathaway.

There was no immediate comment by Alibaba, China’s biggest ecommerce company. Among other things, Alibaba based its motion to dismiss on how it was named in the lawsuit as Alibaba.com instead of its formal corporate name.

In its complaint, Kelly Toys said sales of faked Squishmallows by merchants using Alibaba sites continued despite earlier lawsuits demanding they be stopped. The company had earlier filed the case to stop about 90 ecommerce companies from selling counterfeit versions of the toys. Alibaba was named as a defendant in March.

“Kelly Toys alleges that, notwithstanding that awareness, infringing listings — including some by the Merchant Defendants — have continued to proliferate on the Alibaba platforms,” Furman wrote. He said the court held that the claims were plausible, so the motion to dismiss them was denied.