Leading fashion brands including Gucci and Yves Saint Laurent (YSL) have accused Alibaba Group of continuing to profit from the sale of counterfeit designer goods.
The Chinese e-commerce giant previously pledged to combat the trade in fakes.
However the latest lawsuit from France's Kering, the holding company of brands including Gucci and YSL, indicates that Alibaba has failed to convince luxury goods manufacturers that they have done anywhere near enough to keep counterfeit products off its online sales platforms.
According to the wording of this new lawsuit filed in the US federal court in Manhattan, Alibaba has "knowingly" encouraged, assisted, and profited from the sale of counterfeits.
It accuses Alibaba of permitting merchants on its platforms even if they openly say they sell unlicensed copies.
The 144-page complaint says Alibaba's computer algorithms were "intentionally designed" to offer counterfeits when consumers search for genuine brand names. It argues that that when the term "knockoff" - meaning fake - was typed into a search, Alibaba's system added "handbag".
Alibaba insists the complaint from Kering has "no basis" and has vowed to fight the action.
In an official statement the company responded: "We continue to work in partnership with numerous brands to help them protect their intellectual property, and we have a strong track record of doing so.
"Unfortunately, Kering Group has chosen the path of wasteful litigation instead of the path of constructive cooperation."
Alibaba’s defence is that it has 2,000 employees dedicated to anti-counterfeiting and consumer protection work and spent around £1bn in this area in 2013-14.
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