SHEIN, a leading fast-fashion retailer, has launched a lawsuit against Chinese online marketplace Temu, accusing it of severe breaches including counterfeiting, trade secret theft, and intellectual property infringement.
In its complaint, SHEIN alleges that Temu operates not as a legitimate eCommerce marketplace, but as an unlawful enterprise that directs sellers on what products to list and at what prices, while encouraging intellectual property violations. SHEIN claims Temu’s practices include preventing sellers from removing infringing products and using deceptive tactics to attract US consumers with extremely low prices.
The lawsuit details that Temu, allegedly, is not profiting from these low-priced sales but is instead subsidizing each transaction to mitigate its losses. SHEIN asserts that Temu’s business model relies on encouraging sellers to infringe on intellectual property rights and sell counterfeit or sub-standard goods to offset these losses.
Additionally, SHEIN accuses Temu of brazenly stealing trade secrets, including information on best-selling SHEIN products and internal pricing data. Temu allegedly used this stolen information to direct its sellers to replicate SHEIN’s successful products, offering knock-offs on its platform.
The lawsuit also highlights accusations of Temu reproducing copyrighted images of SHEIN products for promotional purposes and falsely impersonating SHEIN to mislead consumers. A specific example cited includes a Temu-sponsored Google ad that falsely included SHEIN’s name in the headline, while directing users to Temu’s site.
SHEIN further claims that Temu instructed paid social media influencers to falsely promote Temu’s counterfeit products as superior and cheaper alternatives to genuine SHEIN items. The lawsuit contends that Temu’s tactics include poaching SHEIN’s resources, employees, and suppliers.
SHEIN seeks a court order to prevent Temu from using its confidential information and to halt its alleged infringing activities. In response, Temu’s spokesperson dismissed the accusations as “fabricated,” pointing out SHEIN’s own extensive legal troubles related to intellectual property.
This lawsuit follows a legal confrontation from December 2023, when Temu, operated by Boston-based WhaleCo, sued SHEIN for anti-competitive behavior. Temu accused SHEIN of using intimidation tactics and unlawful exclusive-dealing agreements to undermine competition, as well as manipulating the Digital Millennium Copyright Act (DMCA) to hinder Temu’s ability to list products from ultra-fast-fashion suppliers.
SHEIN’s legal action highlights ongoing tensions and complex legal battles in the fast-fashion industry, particularly around intellectual property and market competition.
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