Shein sues Temu for copyright infringement, fraud

Dive Brief:

• Shein is suing its fast fashion rival Temu for counterfeiting, trade secret theft, intellectual property infringement and fraud, according to court documents filed this week.
• The complaint claims that Temu isn’t a “legitimate e-commerce ‘marketplace’” for independent sellers because it allegedly “controls every aspect of its sellers’ activity” by dictating what products can be listed and for how much they can be sold. 
• Attorneys for Shein additionally said Temu “strategically ripped off” the Shein brand and tarnished its popularity by passing itself off as Shein, and said a Temu employee stole some of Shein’s trade secrets, including information on its best-selling products and pricing information.

Dive Insight:

This is the second time Shein has sued its fast fashion rival for allegedly imitating it on social media. In December 2022, Shein accused Temu of trying to trick users into downloading Temu’s app or visiting its website, as well as using its copyrighted images.

However, Shein dropped this lawsuit in October 2023. On the same day, Temu also dismissed a separate lawsuit against Shein, in which it accused Shein of coercing its suppliers to stop doing business with Temu.

The new lawsuit, filed Monday in the U.S. District Court for the District of Columbia, said Temu created accounts on X, formerly Twitter, pretending to represent Shein by displaying counterfeit trademarks to misdirect customers from Shein to Temu.

In the complaint, Shein said Temu poached Shein’s resources, including its suppliers, resources and employees, and paid social media influencers to claim that Temu products “are cheaper and of higher quality” than Shein’s. Temu encourages sellers “to infringe the intellectual property rights of others,” and prevents them from removing products from the Temu website following the alleged infringement, the complaint states.

“Temu massively, continuously, and illegally infringes on [Shein’s] rights directly and through its suppliers who Temu controls,” a Shein spokesperson said in an email to Fashion Dive. “Temu uses deceptive and unlawful tactics, including theft of trade secrets, trademarks and copyrights. [Shein] is confident that evidence will demonstrate Temu’s engagement in infringing activities, which wrongfully misleads consumers, suppliers, and the public.”

The complaint cites reports that say Temu loses an average of $30 on every U.S. order placed, and Shein attorneys argue that Temu wants to minimize “these losses by selling infringing, counterfeit, and sub-standard products.”

“The audacity is unbelievable,” a Temu spokesperson said in an email to Fashion Dive. “[Shein], buried under its own mountain of IP lawsuits, has the nerve to fabricate accusations against others for the very misconduct they’re repeatedly sued for.”

The bulk of lawsuits filed against Shein are over copyright infringement, many of which are from independent designers, but in some cases the lawsuits come from established brands, including H&M and Uniqlo.

In December 2023, Temu sued Shein over anti-competitive behavior. Temu claimed Shein tried to illegally interfere with its business by bullying its suppliers into avoiding business with Temu to lock up its supply chain. That case is ongoing. 

Both brands have faced class action lawsuits from consumers as well as regulatory pressure from lawmakers in the U.S. and the EU.