Fast fashion behemoth Shein had a second federal civil lawsuit filed against it in a week as rival down-market retailer Temu filed an anti-trust action in the U.S. District Court of Massachusetts.
The Temu lawsuit alleges that Shein used monopolistic powers to keep the rival out of the ultra-fast fashion marketplace, violating the Sherman Anti-Trust Act as well as other torts.
“Having controlled nearly the entire market in ultra-fast fashion in the U.S. between early 2020 and Temu’s entry in late 2022, Shein was and is a monopolist,” the lawsuit says. “Shein has attempted to maintain its monopoly by means of its anticompetitive scheme, desperate to avoid the robust competition Temu brought to the market.”
A Shein spokesperson told Reuters that the lawsuit was, “without merit and we will vigorously defend ourselves.”
USA Today has reached out to Shein regarding the lawsuit but have yet to receive a response.
Shein in court on both coasts, faces RICO lawsuit in California
The Massachusetts lawsuit comes on the heels of a separate civil filing by three fashion designers in the District Court for the Central District of California alleging that the Chinese retailer violated the Racketeer Influenced and Corrupt Organizations Act, better known as RICO.
The lawsuit alleges that Shein stole the intellectual property of the designers and that the company uses a, “byzantine shell game of a corporate structure,” to avoid lawsuits.
“Shein has grown rich by committing individual infringements over and over again, as part of a long and continuous pattern of racketeering, which shows no sign of abating,” the lawsuit states.
The suit also alleges that Shein uses a secret algorithm to identify fashion trends early and uses it to create small batches of items that, “is likely to be an infringement.” The company then waits to see if a copyright action is filed.
Krista Perry, a Worcester, Massachusetts illustrator who has previously done work for Nickelodeon and Madewell, alleges that Shein and a related site Romwe.com used her “Make It Fun” design without her permission. When Perry contacted the sites an agent for Shein offered her $500, which she accepted.
When an agent from Shein wrote Perry offering to feature her artwork on the site, Perry gave a terse response. “Shein and Romwe have stolen artwork from both myself and many of my hardworking friends and colleagues,” the lawsuit says. “Your business practices are ethically and morally so wrong and I want nothing to do with your company.”
Perry then alleges that the company again stole her throw blanket design, “Floral Bloom” in 2020.
Larissa Martinez and Jay Baron, who both live in Los Angeles County, make similar claims with Martinez alleging that Shein stole a design for an orange floral jumpsuit and Baron alleging that his artwork, “Trying My Best” was appropriated by the retailer.
While the original RICO laws were aimed at organized crime, the Anticounterfeiting Consumer Protection Act of 1996 added criminal copyright infringement to the list of crimes that can be charged under the statutes.
“Shein takes all claims of infringement seriously, and we take swift action when complaints are raised by valid IP rights holders,” Shein said in a statement Friday. “We will vigorously defend ourselves against this lawsuit and any claims that are without merit.”
Stolen Fun:Worcester artist sues Chinese fashion website Shein, alleging conspiracy to steal work
Fast fashion in front of Congress
While Temu has filed the latest lawsuit against Shein, the fast fashion marketplace has not been spared criticism.
In an interim report from the House Select Committee on the Chinese Communist Party, the committee alleges that both Shein and Temu utilize the de-minimis exception to the Tariff Act of 1930 to avoid customs duties.
The report also states that Temu fails to, “maintain even the façade of a meaningful compliance program,” to avoid selling items made with forced labor, specifically items produced in Xinjang, China where the committee says the Uyghur people are forced to make its items as a part of the Chinese government’s ongoing genocide of the minority group.
In a statement, Shein said that its policy is to, “to comply with the customs and import laws of the countries in which we operate,” and said that it had zero tolerance for items made with forced labor.
USA Today has reached out to Temu but have yet to receive a response.
