Source – cnbc.com
In a dramatic legal move, Chinese fast-fashion behemoth Shein has filed a lawsuit against rival retailer Temu, accusing it of widespread counterfeiting, intellectual property theft, and fraudulent practices. The lawsuit, lodged on Monday in federal court in Washington, D.C., comes as Shein itself faces similar allegations from other major brands and independent designers.
Accusations of Intellectual Property Theft
Shein’s complaint against Temu, which is owned by PDD Holdings, alleges that Temu is deceiving consumers by presenting itself as a legitimate marketplace while actively encouraging sellers to copy designs from other brands. The lawsuit claims that Temu not only allows the sale of infringing products but also fails to remove these products even after their infringement is acknowledged.
According to the complaint, Temu attracts U.S. consumers with promises of extremely low prices. However, Shein argues that Temu is not making a profit from these transactions, suggesting that the company subsidizes each sale and sustains losses to maintain its competitive pricing. Shein asserts that Temu’s business model relies on encouraging intellectual property violations to offset these financial losses.
Competitive Tensions and Past Legal Disputes
The competition between Shein and Temu has intensified as both companies capture significant market share with their low-priced, trend-responsive products. Their aggressive strategies have not only led to market disruption but also garnered criticism regarding their labor practices and alleged connections to the Chinese government.
Last year, Temu initiated a lawsuit against Shein, accusing the company of copyright infringement and using “mafia-style” tactics to coerce suppliers into exclusivity agreements. This ongoing legal battle underscores the fierce rivalry and escalating tensions between the two e-tail giants.
Shein sues Temu over copyright issues
Allegations of Trade Secret Theft and Deceptive Practices
In its lawsuit, Shein alleges that Temu engaged in “brazen” illicit activities, including the theft of trade secrets from Shein employees. The complaint details how Temu allegedly used this stolen information to replicate popular Shein products and market them on its platform. Shein further accuses Temu of reproducing copyrighted images of Shein products for promotional purposes, thus misleading consumers.
The lawsuit also highlights accusations that Temu impersonated Shein on social media to divert customers to its own platform. Shein has provided evidence, including a screenshot of a Temu-sponsored Google ad, which misleads consumers by displaying Shein’s name but linking to Temu’s site.
Legal and Financial Requests
Shein’s extensive 80-page complaint lists numerous examples of alleged design theft and requests the court to impose an injunction against Temu. Shein seeks to prevent Temu from using its confidential information and to address other grievances outlined in the lawsuit.
As the legal proceedings unfold, both companies continue to navigate their competitive landscape amid mounting scrutiny and legal challenges.
