Shein, the fast-fashion giant, has filed a lawsuit against its rival, Temu, accusing the company of stealing designs and building its business on counterfeiting, intellectual property infringement, and fraud. The lawsuit, filed in a Washington, D.C. federal court, comes at a time when Shein itself is grappling with similar accusations from various brands and artists, including Levi Strauss and H&M.
In the complaint, Shein alleges that Temu, owned by PDD Holdings, is masquerading as a legitimate online marketplace. According to Shein, Temu encourages its sellers to steal other brands’ designs and then blocks them from removing the infringing products from its platform, even after admitting to the violations.
Shein’s complaint further claims that Temu attracts U.S. consumers by offering extremely low prices, which are unsustainable and lead to financial losses on each transaction. The lawsuit asserts that Temu’s business model relies on encouraging its sellers to infringe on intellectual property rights and sell counterfeit or substandard goods, as a means to offset these losses.
The rivalry between Shein and Temu has significantly impacted the retail industry, as both companies have rapidly gained market share with their ultra-low-priced products and quick response to fashion trends. However, their success has been marred by numerous controversies, including criticism of labor practices, ties to the Chinese government, and allegations of design theft from other brands.
The legal battle between the two companies is intensifying. Last year, Temu filed a lawsuit against Shein, accusing it of copyright violations and using mafia-style tactics to force suppliers into exclusivity agreements. In its current complaint, Shein accuses Temu of engaging in “brazen” illicit behavior, including the theft of valuable trade secrets by a Temu employee. These secrets allegedly include information about Shein’s best-selling products and internal pricing, which Temu allegedly used to guide its sellers in copying these popular items.
The complaint also accuses Temu of reproducing copyrighted images of Shein products and using them, or instructing sellers to use them, as promotional images on Temu’s website and mobile application. Shein claims that Temu has gone so far as to impersonate Shein on social media, including using a Temu-sponsored Google ad with Shein in the headline but Temu as the web address.
Shein’s lawsuit also alleges that Temu has instructed social media influencers to falsely claim that Temu’s often counterfeit products are of better quality and lower price than genuine Shein items. The complaint includes more than a dozen examples of clothing and designs that Temu allegedly copied.
Shein is seeking a court order to prevent Temu from using its confidential information and engaging in other unfair practices. The case marks a significant escalation in the ongoing battle between two of the fastest-growing players in the global retail market.
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