Shein and Temu.
Yuki Iwamura | Bloomberg | Stefani Reynolds | AFP | Getty Images
China-linked fast fashion giant Shein is suing rival Temu, alleging The retailer stole her designs and built an empire using counterfeiting, intellectual property infringement and fraud.
The lawsuit, filed Monday in federal court in Washington, D.C., comes as Shein itself is defending itself against similar accusations from a wide variety of independent brands and artists, including Levi Strauss and H&M.
In its complaint, Shein alleges that Temu, owned by PDD ParticipationsIt “masquerades” as a legitimate online marketplace by encouraging its sellers to steal other brands’ designs and then preventing them from removing products from the platform, even after they have admitted to the infringement.
“Temu lures U.S. consumers into downloading and using its mobile app with promises of extremely low prices. But Temu makes no profit from the sale of these products, which are priced so low that it must subsidize each sale, thereby losing money on each transaction,” the complaint states.
“Only by encouraging its sellers to infringe the intellectual property rights of others and sell counterfeit or substandard products can Temu hope to minimize the huge losses it is subsidizing,” the lawsuit added.
The two rival e-tailers have taken the retail industry by storm with their ultra-low-priced products and ability to respond to trends much faster than their brick-and-mortar competitors. Along the way, both have racked up a mountain of criticism related to their labor practices, their connections to the Chinese government and their alleged use of other brands’ designs.
In their fight for market share, both companies have taken to the courts to accuse each other of a series of outrageous allegations. Last year, Temu sued Shein over copyright issues and allegations that it uses “mafia-style intimidation of suppliers” to force them into exclusivity deals.
In Shein’s complaint, the company accused Temu of “brazen” misconduct. It said at least one of Temu’s employees stole “valuable trade secrets” identifying Shein’s best-selling products, along with internal pricing information, to help the company in its efforts to compete.
“Armed with this stolen information, Temu directed its sellers to copy those and other best-selling Shein products and sell knockoff versions on Temu's website and mobile app,” the complaint says.
“Temu is not a typical infringer,” the lawsuit states. “To advertise counterfeit versions of Shein's products, Temu has reproduced virtually identical copyrighted images of Shein's products and used them, or instructed sellers to use them, as promotional images on Temu's website and mobile app.”
Shein and Temu designs seen side by side.
Courtesy: United States District Court for the District of Columbia
The company goes so far as to say that Temu falsely impersonated Shein on social media site X in an effort to “divert customers from the Shein platform to the Temu platform.”
The complaint includes a screenshot of a Google ad sponsored by Temu that shows Shein in the title but Temu as the web address.
“To further deceive consumers, Temu has instructed its paid social media influencers to falsely claim that Temu products, which are often counterfeits of Shein products, are cheaper and of higher quality than genuine Shein products,” the complaint states. “Temu has gone to great lengths to imitate Shein, including by stealing Shein's resources, employees, and suppliers.”
Shein's 80-page complaint includes more than a dozen examples of garments and designs that Temu allegedly copied.
She has asked the court to rule in her favor and issue an order prohibiting Temu from using Shein's confidential information, among other requests.
Temu did not immediately respond to CNBC's request for comment.
