SHEIN files lawsuit against Temu over copyright infringement

Fast-fashion giant SHEIN is suing Chinese online marketplace Temu for copyright infringement and has accused Temu of being an "unlawful enterprise built on counterfeiting, theft of trade secrets, infringement of intellectual property rights and fraud".

According to the lawsuit, SHEIN alleged that Temu is "masquerading" as a legitimate eCommerce marketplace where independent sellers can offer their products for sale. However, Temu is "not actually a marketplace platform", said SHEIN. 

SHEIN said its rival Temu directs what products sellers can list and the prices for which they can sell, as well as encourages them to infringe the intellectual property rights of others. 

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Furthermore, Temu prevents sellers from removing their products from Temu's website after there is admittance to infringement, said SHEIN, adding that "these are not the actions of a legitimate third-party marketplace". 

The fast-fashion company also claimed that Temu draws US consumers into downloading and using its mobile application with promises of extremely low pricing. "But Temu is not profiting from the sale of these products, which are priced so low that Temu must subsidise each sale, losing money on every transaction,” the complaint said. 

“Only by encouraging its sellers to infringe the intellectual property rights of others and sell counterfeit or sub-standard goods can Temu hope to minimise the massive losses it is subsidising,” the lawsuit added.

In SHEIN's complaint, the company also accused Temu of "brazen" illicit behaviour. It said at least one of Temu's employees stole "valuable trade secrets" that identified best-selling SHEIN products, along with internal pricing information, to help it in its efforts to compete. 

“Armed with this stolen information, Temu then directed its sellers to copy those and other best-selling SHEIN products and sell knock-off versions on Temu’s website and mobile application,” said SHEIN in the lawsuit. 

“Temu is no garden-variety infringer,” the suit added. “In order to advertise the counterfeit versions of SHEIN products, Temu has reproduced virtually identical copyrighted images of SHEIN products and used them, or instructed sellers to use them, as promotional images on the Temu website and mobile application.”

In addition, SHEIN alleges that Temu has falsely pretended to be SHEIN by creating imposter X accounts to misdirect consumers away from the SHEIN platform to the Temu platform. Included in the complaint was a screenshot of a Temu-sponsored Google ad that shows SHEIN in the headline. However, Temu was listed as the website address. 

It also alleged that Temu has instructed its paid social media influencers to falsely claim that Temu products, which are often counterfeits of SHEIN products, are cheaper and of higher quality than genuine SHEIN goods, said the suit. 

“Temu has gone to great lengths to imitate SHEIN, including by poaching resources, employees, and suppliers from SHEIN," it added. 

SHEIN asked the court to rule in its favour and enter an order that would prohibit Temu from using SHEIN's confidential information. 

In a statement seen by MARKETING-INTERACTIVE, a spokesperson from SHEIN said "Temu massively, continuously, and illegally infringes on SHEIN’s rights directly and through its suppliers who Temu controls. 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."

Meanwhile, a spokesperson from Temu said the audacity is unbelievable. "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 spokesperson added when MARKETING-INTERACTIVE reached out. 

This suit comes after Temu filed a lawsuit in December 2023 accusing SHEIN of conducting “intensified” anti-competitive behaviour.

According to the lawsuit filed by Boston-based company WhaleCo, which operates in the US as Temu, SHEIN was accused of hatching a “desperate” plan by employing a "Mafia-style intimidation" to eliminate the competitive threat posed by Temu.

WhaleCo. claimed that SHEIN launched unlawful, anticompetitive exclusive-dealing agreements with coercive IP transfers from approximately 10,000 suppliers to SHEIN, without due consideration and, oftentimes, without their knowledge.

The court filing also said SHEIN has devised an anticompetitive scheme that misuses and abuses the Digital Millennium Copyright Act (DMCA) procedures and the US Copyright Office registration regime to prevent ultra-fast-fashion suppliers from listing their products for sale on Temu.  

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