Chinese fast-fashion giant Shein has filed a lawsuit against its rival Temu, accusing the retailer of stealing its designs and building its success through counterfeiting, intellectual property infringement, and fraud. This comes as Shein faces similar allegations from brands like Levi Strauss and H&M. Shein claims that Temu is posing as a legitimate online marketplace, encouraging its sellers to steal other brands’ designs and preventing them from removing infringing products from the platform.
According to the complaint filed in federal court, Temu attracts US consumers with promises of extremely low pricing, but it is actually losing money on every transaction due to the low prices it offers. Shein alleges that Temu can only minimize its losses by encouraging its sellers to infringe on intellectual property rights and sell counterfeit or sub-standard goods. This lawsuit highlights the fierce competition between the two e-commerce giants, who have disrupted the retail industry with their ultra low-priced products and ability to respond quickly to trends.
Both Shein and Temu have faced criticism for their labor practices, connections to the Chinese government, and alleged use of other brands’ designs. Last year, Temu sued Shein over copyright concerns and allegations of bullying suppliers into exclusivity agreements. In its complaint, Shein claims that at least one of Temu’s employees stole valuable trade secrets, including best-selling Shein products and internal pricing information, to help Temu compete.
The lawsuit further alleges that Temu has reproduced copyrighted images of Shein products to advertise its counterfeit versions. It also accuses Temu of pretending to be Shein on social media platforms to misdirect customers away from Shein’s platform. The complaint includes a screenshot of a Temu-sponsored Google ad that shows Shein in the headline but directs to Temu’s website. Shein claims that Temu has instructed its paid social media influencers to falsely claim that Temu products are cheaper and of higher quality than genuine Shein goods.
To support its case, Shein presents more than a dozen examples of clothes and designs that Temu allegedly copied. The company is seeking a court ruling that would prohibit Temu from using Shein’s confidential information and other remedies. Temu has not yet responded to CNBC’s request for comment.
In conclusion, the legal battle between Shein and Temu sheds light on the cutthroat competition in the fast-fashion industry. While both companies have gained popularity for their low-priced products, they now face accusations of intellectual property theft and fraudulent practices. These allegations not only tarnish their reputations but also raise questions about the ethics of their business models. As the case unfolds, it will be interesting to see how the court addresses these issues and whether it will set a precedent for the industry as a whole.
