Shein Sues Temu Over Copyright Infringement, Fraud

Chinese-linked fast-fashion giant Shein is suing rival Temu, alleging the retailer stole its designs and built an empire using counterfeiting, intellectual property infringement and fraud, reports CNBC. The suit, filed Monday in Washington, D.C., federal court, comes as Shein itself fends off similar allegations from a wide variety of brands and independent artists, including Levi Strauss and H&M. In its complaint, Shein alleges that Temu, owned by PDD Holdings, is “masquerading” as a legitimate online marketplace because it encourages its sellers to steal other brands’ designs and then prevents them from removing products from the platform, even after they have admitted to infringement.

Shein’s 80-page complaint includes more than a dozen examples of clothes and designs that Temu allegedly ripped off. “Temu has gone to great lengths to imitate Shein, including by poaching resources, employees and suppliers from Shein,” the complaint said. It has asked the court to rule in its favor and enter an order that would prohibit Temu from using Shein’s confidential information, among other requests.

Total Retail's Take: Shein is now hitting back at Temu, which sued the low-cost e-tailer last year over copyright and supplier intimidation accusations. This is the second round of legal sparring between the two companies after they decided to drop lawsuits against each other in 2023. Shein and Temu have both taken the e-commerce industry by storm with ultra low pricing and rapid responses to new trends. Both organizations have also racked up criticism related to labor law violations, product design theft, and environmental harm.

Now, the fast-fashion brand is accusing Temu of routinely stealing its designs and alleged a former employee stole confidential trade secrets. Shein also alleged that Temu loses money on each sale it makes and uses trademark infringement to make up for the losses. “Only by encouraging its sellers to infringe the intellectual property rights of others and sell counterfeit or sub-standard goods can Temu hope to minimize the massive losses it is subsidizing" in its extreme low-price model, the lawsuit added. This comes as the Chinese-founded e-commerce company faces bipartisan public scrutiny that has all but squashed its efforts to go public in the U.S.