Online fashion retailers have filed a lawsuit against Shein in the United States, accusing the fast-fashion rival of employing mafia-style intimidation tactics to deter suppliers from working with them. This lawsuit marks the latest round of legal battles between the two companies founded in China.
Key Facts
WhaleCo, the operator of Temu in the United States, has filed a lawsuit in a Washington, D.C. court alleging that Shein is “targeting harmful and illegal conduct,” considering Temu to be the biggest threat to Shein. The lawsuit accuses Shein of violating intellectual property rights by “falsely detaining merchants working with Temu,” along with threats, intimidation, and coercion. Temu also claims that Shein has lured key marketing and advertising employees who possess confidential information and expertise that Shein is copying. The lawsuit further alleges that Shein physically detained merchants who chose to work with Temu and even illegally seized their devices ahead of a major advertising campaign for the Super Bowl match next February. Temu is asking the court to “stop Shein’s misleading use of the U.S. legal system and anti-competitive behavior.”
Critical Quote
The Temu lawsuit claims: “Shein’s conduct has caused irreparable harm to Temu, American consumers, hard-working suppliers in the fast fashion space, and the U.S. intellectual property and judicial system.”
Main Background
Shein was founded in China and is now headquartered in Singapore, rapidly growing to become the largest fast-fashion retailer in the world, surpassing more established competitors such as H&M and Zara. Temu is owned by the Chinese internet giant PDD Holdings and was launched in the United States in September of last year. The popularity of both companies in the fashion retail space is attributed to their extensive stock of heavily discounted products. Despite their rapid ascent, both companies have faced numerous controversies. Temu has been criticized for weak customer support and data security practices, while Shein has been accused of stealing designs and intellectual property from major fashion brands and independent designers. The two sides have clashed legally in the past, with Shein suing Temu last year for alleged intellectual property rights violations, while Temu accused Shein of forcing suppliers to sign exclusive agreements. In October, both sides agreed to drop the lawsuits.
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