Shein has filed a comprehensive lawsuit against its rival Temu, accusing the fast-fashion retailer of engaging in widespread copyright infringement, counterfeiting, and intellectual property theft. This legal action, taken in Washington, D.C., is the latest in an ongoing series of disputes between the two companies, both known for their ultra-low-priced products and rapid responses to market trends.
Shein Alleges Temu Controls and Manipulates Sellers
In the lawsuit, Shein claims that Temu, owned by PDD Holdings, is not a genuine online marketplace. Instead, it alleges that Temu controls its sellers by directing them to list specific products at set prices, encouraging them to infringe on intellectual property rights, and preventing them from removing infringing products even after acknowledging the violations.
The lawsuit emphasizes that Temu lures U.S. consumers with promises of extremely low prices, but these low prices come at a cost—Temu reportedly loses money on every sale it makes, subsidizing these transactions to gain market share.
Deceptive Marketing Practices
Shein’s complaint goes further, accusing Temu of “masquerading” as a legitimate business while it engages in deceptive practices. For instance, Shein alleges that Temu uses its trademark in Google ads to mislead customers, with ads showing Shein’s name but directing users to Temu’s website.
The lawsuit also claims that Temu has impersonated Shein on the social media platform X (formerly Twitter) to divert customers away from Shein.
Theft of Trade Secrets Claimed
The lawsuit includes detailed accusations that a Temu employee stole valuable trade secrets from Shein, including information about best-selling products and internal pricing strategies. Shein asserts that this stolen data was used to direct Temu sellers to create knock-off versions of Shein’s products, which were then sold at lower prices on the Temu platform.
Additionally, Shein provided more than a dozen examples of clothing and designs that it claims Temu copied.
Impersonation and Trademark Abuse
Shein’s legal action against Temu is particularly significant as the two companies have been embroiled in a heated rivalry, both vying for dominance in the fast-fashion market.
This lawsuit follows previous legal conflicts between the two, including a case where Temu accused Shein of using “mafia-style intimidation” to pressure suppliers into exclusivity agreements.
Despite its aggressive stance against Temu, Shein is also dealing with its own legal challenges. The company is currently facing lawsuits from several brands and independent artists, including Levi Strauss and H&M, who accuse Shein of systematically infringing on their copyrights. As Shein prepares for a potential public offering in the U.S., its legal battles with Temu and others may have significant implications for its business.
In this lawsuit, Shein is seeking a court order to stop Temu from using its confidential information and engaging in these alleged practices. The outcome of this legal battle could shape the future dynamics between these two fast-fashion giants.
Featured Image courtesy of Jakub Porzycki/NurPhoto via Getty Images
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