Court cases involving fast fashion: An overview of Shein’s RICO and antitrust cases

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Behemoth of fast fashion Two federal civil lawsuits were filed against Shein, and they arrived within a week of one another.

The latest occurred when Temu, a competitor lower-class retailer, filed an antitrust lawsuit in the Massachusetts U.S. District Court.

Three fashion designers accused the online retailer of copyright infringement and racketeering earlier in July, and they filed a lawsuit in the District Court for the Central District of California.

Shein has declared that both lawsuits are without merit and that it is prepared to defend itself.

This sums up our knowledge regarding the two cases.

Why is Shein being sued by Temu?

The Temu lawsuit claims that Shein violated the Sherman Anti-Trust Act and other torts by using monopolistic powers to keep the rival out of the ultra-fast fashion market.

“Shein was and is a monopolist,” the lawsuit claims, having dominated almost the whole ultra-fast fashion market in the U.S. between early 2020 and Temu’s entry in late 2022. In an attempt to keep Temu’s fierce competition from entering the market, Shin has tried to preserve its monopoly through anticompetitive tactics.

The lawsuit is “without merit and we will vigorously defend ourselves,” a Shein spokesperson told Reuters.

Pages from the Shein website, left, and from the Temu site, right, are shown in this photo, in New York, Friday, June 23, 2023. Chinese e-commerce retailer Temu has filed a lawsuit accusing its rival Shein of violating U.S. antitrust law by blocking clothing manufacturers from working with Temu.

Why is Shein being sued by fashion designers?

Three fashion designers allege that the Chinese retailer violated the Racketeer Influenced and Corrupt Organizations Act (RICO) in a separate civil lawsuit.
According to the lawsuit, Shein stole the designers’ intellectual property, and the business employs a “byzantine shell game of a corporate structure” to keep itself out of legal trouble.

According to the lawsuit, “Shein has become wealthy by repeatedly committing individual violations as part of a long and continuous pattern of racketeering, which shows no sign of abating.”

The lawsuit also claims that Shein produces limited quantities of goods that “is likely to be an infringement” by using a proprietary algorithm to predict fashion trends early on. After that, the business watches to see if a copyright action is brought.

Illustrator Krista Perry, formerly of Madewell and Nickelodeon, claims that Shein and the associated website used her “Make It Fun” design without permission. Perry lives in Worcester, Massachusetts. Perry accepted a $500 offer from Shein’s agent after contacting the websites.

Perry responded sharply to a letter from a Shein representative offering to display her artwork on the website. “Shein and Romwe have stolen artwork from both myself and many of my hardworking friends and colleagues,” the complaint states. “Your business practices are ethically and morally so wrong and I want nothing to do with your company.”

Perry continues by accusing the business of stealing her throw blanket design, “Floral Bloom,” in 2020 once more.

Both Larissa Martinez and Jay Baron, who reside in Los Angeles County, make comparable accusations. Martinez says Shein stole the idea for an orange floral jumpsuit, and Baron says the retailer took his artwork, “Trying My Best.”

The Anticounterfeiting Consumer Protection Act of 1996 expanded the list of offenses that could be prosecuted under the RICO statutes to include criminal, even though the original laws were intended to target organized crime.

Shein released a statement on Friday stating, “Shein takes all claims of infringement seriously, and we take swift action when complaints are raised by valid IP rights holders.” “We will vigorously defend ourselves against any unfounded claims as well as this lawsuit.”

A page from the Shein website is shown in this photo, in New York on June 23, 2023.

What else is going on with Shein?

Shein, a player in the fast fashion industry, has come under fire from rival Temu, which recently brought legal action against the business.

The House Select Committee on the Chinese Communist Party claims in an interim report that Shein and Temu use the Tariff Act of 1930’s de-minimis exception to evade paying customs duties.

In addition, the committee’s report claims that Temu has failed to “maintain even the façade of a meaningful compliance program” in order to refrain from selling goods made using forced labor, particularly those made in Xinjang, China, where the Uyghur people are allegedly forced to make the products as part of the Chinese government’s ongoing genocide against the minority group.

Shein issued a statement in which it declared that it had zero tolerance for products manufactured using forced labor and that its policy is “to comply with the customs and import laws of the countries in which we operate.”

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