Shein sues Temu for copyright infringement in latest legal dispute

Shein is suing rival fast-fashion company Temu over allegations that the online retailer stole confidential information to copy its designs, the same allegations that Shein itself has faced in the past.

The lawsuit alleged that Temu – owned by Chinese e-commerce giant PDD Holdings – “passes off” as a legitimate marketplace by tricking sellers into stealing designs and then continuing to sell the stolen designs after admitting infringement.

The lawsuit — filed Monday in federal court in Washington — is the latest in a years-long legal dispute between the competitors.

Shein and Temu – companies with ties to China – have gained significant market share in the US.

The e-commerce sites have won over customers with their ultra-low prices and frequent launches of trendy products – although both businesses are linked to sustainability and controversies over forced labour.

Shein claims that Temu loses money on every sale.

“Only by encouraging its sellers to infringe the intellectual property rights of others and sell counterfeit or low-quality goods can Temu hope to minimize the enormous losses it incurs,” the complaint reads, ironically alluding to the same business model that Shein apparently uses.

Shein itself has been sued by Levi Strauss, H&M, and shoe maker Dr Martens AirWair International, all of which claimed the e-commerce site copied their designs.

A spokesperson for Temu told CNBC that Shein’s “courage is unbelievable.”

“Shein, weighed down by his own mountain of intellectual property lawsuits, has the audacity to invent accusations against others for the same misconduct for which they are repeatedly sued,” a spokesman for Temu said.

Last year, Temu sued Shein, alleging the company used “mafia-style intimidation” tactics to stop merchants and suppliers from doing business with Temu.

The lawsuit alleged that Shein “falsely imprisoned” suppliers working with both companies by holding them in Shein offices for hours, taking away their phones and threatening them for doing business with Shein.

Shein’s lawsuit accuses Ten of similar shady business tactics that the company claims “brazenly” stole Shein’s internal trade secrets and pricing information.

Temu then ordered its vendors to copy stolen, best-selling Shein designs and sell the counterfeits on Temu’s website, the lawsuit says.

The complaint covers about a dozen images used on the Temu website that are virtually identical to images on the Shein website. Some of the images are slightly cropped, while others advertise the exact same design in a different color.

One Shein design features four autumn coffee mugs with pumpkins and bats on a beige background. Temu’s version features the same design, but on a light blue background.

Shein claims that Temu is posing as a competitor on social media to drive customers away from the Shein website.

The lawsuit was accompanied by a screenshot of a fake Shein account on Platform X, which Temu allegedly used in the past to deceive customers and lead them to believe it was the same company.

Temu used the same scheme when it came to advertising, Shein said. Temu paid for search engine ads that included the word “Shein” in the headline and then redirected users to Temu’s website when they clicked on it, the lawsuit said.

The complaint alleges that Temu paid social media influencers to claim that the counterfeit products were of better quality than genuine Shein products.

“Temu has made every effort to emulate Shein, including by acquiring Shein’s assets, employees, and suppliers,” the lawsuit reads.

Shein is seeking damages and is asking the court to prohibit Tein from using the Shein brand name in the future and to order the return of confidential Shein documents.