Shein sues Temu (again) claiming counterfeiting and IP infringement

The legal battle between Shein and Temu has been raging for some time with a number of lawsuits filed by both sides, some of which have since been dropped. 

On Monday this week (19 August), Shein filed a brand new lawsuit in a Washington DC Court claiming, amongst other things, that Temu is “an unlawful enterprise built on counterfeiting, theft of trade secrets, infringement of intellectual property rights, and fraud”. 

Some of Shein's latest allegations about Temu's activities include:

• The creation of imposter “Shein” social media accounts by Temu employees or agents;
• The theft of trade secrets from Shein by a Temu employee which resulted in the sale of knock-off versions of Shein's best-selling products; 
• The use of a Shein trade mark in a Google ads for Temu;
• The encouragement of sellers to infringe third party IP rights.

There are some interesting examples provided by Shein of claimed infringement:

(Image credit: https://www.thefashionlaw.com/shein-accuses-temu-of-running-fraud-marketplace/#:~:text=Shein%20is%20suing%20Temu%20and,trademark%20dilution%3B%20unfair%20competition%3B%20false) 

Whilst there is plenty of in-fighting between these two retailers on topics such as IP infringement and antitrust issues, this should not distract from the fact that that each company is also facing some pretty serious legal issues of their own. 

For example, Shein has been sued by brands such as H&M, Uniqlo, Ralph Lauren and Oakley for various forms of IP infringement (some of which have been resolved by way of settlement) and is currently facing a class-action lawsuit claiming that the business is guilty of an “industrial scale scheme of systematic, digital copyright infringement of the work of small designers and artists” (perhaps not too dissimilar to the claims they have now made against Temu…?). 

Meanwhile, the Arkansas Attorney General has filed a lawsuit against Temu claiming that the platform is “functionally malware and spyware… purposefully designed to gain unrestricted access to a user’s phone operating system". 

With so many ongoing legal issues, you would think that business performance would start to suffer. However, Shein has been linked to a £50bn IPO on the London Stock Exchange and Temu has reported sales of US$20billion in the first half of 2024, which exceeds their total annual sales in 2023. 

Although many of these claims are still only allegations at this stage, they must surely start to cast some doubt on the activities of these two e-commerce giants.