Stitched in Scandal: Unravelling Shein’s Latest Legal Troubles

For Shein (or at least, its legal team), this summer has been anything but relaxing. Check out the fast fashion giant’s month in review:

July 11th: Three independent artists bring a suit alleging that Shein infringed their copyright, violating the Racketeer Influenced and Corrupt Organizations Act — an Act historically used to address organized crime July 14th: Fast-fashion company Temu hits Shein with a competitor antitrust suit July 31: The next hearing of H&M’s copyright infringement suit against Shein

Image courtesy of Narcity https://www.narcity.com/get-shein-canada-clothes-for-free-heres-how

Shein is no stranger to controversy.

The brand has received several allegations of copyright infringement, becoming a focal point of trending social media discussions about design theft. Further, July’s lawsuits coincide with Shein’s heavily criticized sponsorship trip where influencers visited a “Shein Innovation Center” in Ghangzhou, China, and shared complimentary statements about the brand on social media. The trip was a move to mend Shein’s reputation after years of allegations concerning labour exploitation and environmentally harmful activity.

Definition: Ultra-Fast Fashion

“Ultra-fast fashion is fast fashion (cheap, quick turnaround collections) with a digital focus. Ultra-fast fashion brands utilize digital retail and a different approach to supply chains, allowing brands to produce new collections that respond to consumer demand as fast as possible” (Textile Consult)

When Does Copyright Infringement Become Racketeering?

Racketeering is the act of acquiring a business through illegal activity, and Shein’s business model of IP theft has attracted legal scrutiny in recent years. So at what point is Shein’s business model basically racketeering?

Three independent designers have brought a suit against Shein alleging that it has produced, distributed, and sold “exact copies” of their creations. But they are far from the only designers Shein appears to have stolen from.

Elizations: Knitwear designer Eli H. https://www.instagram.com/elizations/

Indigo Child: Brand that offers crochet womenswear and accessories (scarves, gloves, hats, earrings & bags), home items (cushions & wall decorations) and crochet patterns. https://www.indigochilduk.com/

The plaintiffs claim that their experience is a symptom of Shein’s large-scale and systemic intellectual property theft from U.S. designers large and small” — what they call “Shein’s ‘design’ process and organizational DNA.” They allege that Shein employs a “secretive algorithm” that identifies emerging fashion trends so they can be reproduced as quickly as possible.

The lawsuit alleges that Shein’s copyright infringements violate the United States’ Racketeer Influenced and Corrupt Organizations (“RICO”) Act. Though the RICO Act was originally established to address organized crime, the plaintiffs cite a 2005 act of Congress that recognized “criminal infringement of copyright” as racketeering.

The plaintiffs argue that their racketeering allegation is appropriate because Shein’s “confusing”, “decentralized” corporate structure indicates that its infringements are “committed not by a single entity, but by a de-facto association of entities”, therefore, “just as intended by Congress, the same decentralization that facilitates Shein’s criminal infringement and other racketeering activity, renders individual components of the enterprise, such as the defendants, liable under civil RICO”

Image courtesy of: https://thekrazycouponlady.com/tips/money/is-temu-legit

Clash of the Ultra-Fast: “The US market is the primary theatre of this war”

Temu, an extension of Chinese e-commerce company Pinduoduo, is an online marketplace known for its low prices, giveaways, and ‘ultra-fast’ production of goods. Recognized as the most downloaded app in the US, Temu is one of Shein’s major competitors.

Temu’s lawsuit claims that Shein violated US antitrust laws by using aggressive tactics to push Temu out of the US market. It alleges that Shein compelled China-based clothing manufacturers to sign exclusivity contracts and imposed extrajudicial fines on merchants who worked with Temu. Further, the suit claims that Shein pressured retailers to assign it their intellectual property rights so they could be enforced against those who dealt with Temu.

Fast v Faster: H&M’s Suit Against Shein

Swedish fast fashion brand H&M has brought a copyright infringement lawsuit against Shein, accusing it of copying several designs. The suit, initially filed in Hong Kong in 2021, will have its next hearing on July 31 at the Hong Kong High Court.

Responses to the H&M-Shein lawsuit have pointed out the irony of H&M’s position as the brand has received several copyright infringement allegations itself. As described by Highsnobiety, the lawsuit is very “Pot Meets Kettle” — “companies famous for knocking off other designers are battling over purported knock-off designs”. The situation is emblematic of broader problems in the fast fashion space. Though Shein is at the center of numerous design copying allegations, it is not the only offender.

Learn more about 30 businesses Shein stole designs from.

And remember to shop small and support local businesses in your area! Leave a like, comment and follow on our latest instagram post for a chance to win a $40 gift card to Etsy.

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From independent designers to its fast fashion peers, Shein is causing conflict across the fashion space. What do you think — are Shein’s lawsuits hurdles or mere bumps in the road? What will it take to slow ultra-fast fashion down?

Written by: Carolyn MacDonald, Director of Events for the Property Law Society, J.D Candidate 2025 — Lincoln Alexander School of Law