Chinese fast-fashion giant SHEIN has filed a lawsuit against its rival Temu, accusing the retailer of stealing its designs and building an empire through counterfeiting, intellectual property infringement, and fraud, according to a report by CNBC.
The suit, filed on Monday in the US District Court for the District of Columbia comes as SHEIN itself faces similar allegations from a 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 by encouraging its sellers to steal other brands’ designs and then preventing them from removing infringing products from the platform, even after they have admitted to the infringement.
“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 stated.
“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.
The two e-tailers have faced criticism over their labour practices, connections to the Chinese government, and alleged use of other brands’ designs as they have rapidly gained market share.
Temu-SHEIN legal battle
Last year, Temu sued SHEIN over copyright concerns and allegations that it uses “mafia-style intimidation of suppliers” to bully them into exclusivity agreements.
In its latest complaint, SHEIN accused Temu of “brazen” illicit behaviour, alleging that at least one of Temu’s employees stole “valuable trade secrets” that identified best-selling SHEIN products and internal pricing information to help it compete, according to the CNBC report.
“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,” the complaint said.
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