Shein and Temu.
Yuki Iwamura | Bloomberg | Stephanie Reynolds | AFP | Getty Images
China-linked fast fashion giant Shein is suing rival Temu, claiming the retailer stole his designs and built an empire using counterfeiting, copyright infringement and fraud.
The suit, filed Monday in Washington, D.C., federal court, comes as Shein herself fends off similar accusations from a wide variety of labels and independent artists, including Levi Strauss and H&M.
In her complaint, Shein alleges that Temu, her property PDD Holdings“masquerading” as a legitimate online marketplace because it encourages its sellers to steal other brands’ designs and then prevents them from removing products from the platform, even after they have admitted to the infringement.
“Temu entices US consumers to download and use its mobile app with promises of extremely low prices. But Temu does not profit from the sale of these products, which are priced so low that Temu must subsidize each sale , losing money on every trade.” the complaint said.
“Only by encouraging its sellers to infringe the intellectual property rights of others and sell counterfeit or substandard products can Temu hope to minimize the massive losses it subsidizes,” the lawsuit added.
Dueling e-tailers have taken the retail industry by storm with their extremely low product prices and their ability to respond to trends much faster than their traditional competitors. Along the way, the two have garnered a mountain of criticism over their labor practices, their dealings with the Chinese government, and their alleged use of other brands’ designs.
As the two jockeys for market share, they have gone to court to accuse each other of a series of scandalous allegations. Last year, Temu sued Shein over copyright concerns and allegations that it uses “mafia-style intimidation of suppliers” to bully them into exclusivity deals.
In Shein’s complaint, the company accused Temu of “brazen” illegal conduct. It said at least one of Temu’s employees stole “valuable trade secrets” that identified Shein’s best-selling products, along with inside pricing information, to help it in its efforts to compete.
“Armed with this stolen information, Temu then directed its sellers to copy these and other Shein best-selling products and sell versions on Temu’s website and mobile app,” the complaint said.
“Temu does not infringe on the garden variety,” the lawsuit said. “To advertise the counterfeit versions of Shein products, Temu has reproduced substantially identical copyrighted images of Shein products and used or instructed sellers to use them as promotional images on the Temu website and mobile app. “
Drawings by Shein and Temu seen side by side.
Courtesy: United States District Court for the District of Columbia
The company goes so far as to say that Temu falsely pretended to be Shein on social networking site X in an attempt to “misdirect customers away from the Shein platform to the Temu platform.”
The complaint includes a screenshot of a Temu-sponsored Google ad that shows Shein in the headline but Temu as the web address.
“To further deceive consumers, Temu instructed paid social media influencers to falsely claim that Temu products that are often knockoffs of Shein products are cheaper and of higher quality than genuine Shein products,” the complaint said. “Temu has gone to great lengths to emulate Shein, including poaching resources, employees, and suppliers from Shein.”
Shein’s 80-page complaint includes more than a dozen examples of clothes and designs that Temu allegedly ripped off.
He asked the court to rule in his favor and issue an order barring Temu from using Shein’s confidential information, among other requests.
Temu did not immediately respond to CNBC’s request for comment.
