Fashion group Shein sues Temu, alleging counterfeiting

Chinese fashion company Shein has been accused in a lawsuit of counterfeiting by multiple clothing brands and retailers but has now fired a legal volley of its own at rival Temu.

The complaint, filed in the US, accuses Temu owner PDD Holdings and various other entities associated with the business of "counterfeiting, theft of trade secrets, infringement of intellectual property rights, and fraud."

Both companies have built businesses selling ultra-low price 'fast fashion' items as well as household goods, and have courted controversy due to their strategy of shipping goods in small packages to buyers in the US and Europe, avoiding customs duties under so-called 'de minimis' rules and – according to several complaints – selling copycat versions of other companies' brands.

Shein is facing dozens of lawsuits claiming copyright infringement around the world, according to a recent Financial Times report, including from the likes of H&M, Uniqlo, Levis Strauss & Co, Deckers, and Oakley.

In its new broadside levelled at Temu, Shein claims that the company "directs what products [sellers] can list and the prices for which they can sell; encourages them to infringe the intellectual property rights of others; and even prevents them from removing their products from Temu's website after they have admitted to infringement," claims the complaint.

"These are not the actions of a legitimate third-party marketplace," it continues. "Temu is not profiting from the sale of these products, which are priced so low that Temu must subsidise each sale, losing money on every transaction. Only by encouraging its sellers to infringe the intellectual property rights of others and sell counterfeit or sub-standard goods can Temu hope to minimise the massive losses it is subsidising."

Shein also accuses Temu of misusing its trademarks, bamboozling Internet searchers looking for Shein products to click on its website instead, paying social media influencers to publish false claims about goods on both platforms, and stealing trade secrets including pricing information.

In a statement submitted to The Register.com, Temu hit back, saying: "The audacity is unbelievable. Shein, buried under its own mountain of IP lawsuits, has the nerve to fabricate accusations against others for the very misconduct they’re repeatedly sued for."

Both Shein and Temu have also come under the spotlight of the European Commission, which in June sent formal requests for information under the new Digital Services Act (DSA), seeking the companies' positions on the measures related to the 'Notice and Action mechanism' which allows users to notify illegal products, the traceability of traders, and transparency of recommender systems, amongst other things.