Shain and Tem.
Yuki Iwamura | Bloomberg | Stephanie Reynolds | AFP | Getty Images
China-linked fast fashion giant Shein sues rival Temu, alleging The retailer stole its designs and built an empire through counterfeiting, intellectual property infringement and fraud.
The lawsuit, filed Monday in Washington, D.C., federal court, comes as Shein itself refutes similar accusations from various brands and independent artists, including Levi Strauss and H&M.
Shein alleges in the complaint that Temu is owned by Pinduoduo Holdingsis “masquerading” as a legitimate online marketplace because it encourages its sellers to steal other brands’ designs and then prevents them from removing their products from the platform, even if they admit to infringement.
“Temu promised extremely low prices to entice U.S. consumers to download and use its mobile apps. But Temu did not profit from the sales of these products, which were priced so low that Temu had to provide a Subsidy, loss on every trade.
“Only by encouraging sellers to infringe on the intellectual property rights of others and sell counterfeit or substandard goods can Temu hope to minimize the substantial losses of its subsidies,” the lawsuit adds.
Competing e-tailers have taken the retail industry by storm with their ultra-low prices and their ability to respond to trends faster than their traditional rivals. Along the way, the pair have faced considerable criticism for their labor practices, ties to the Chinese government and alleged use of designs from other brands.
As the two companies battled for market share, they sued each other in court over a series of scandals. Last year, Temu sued Shein over copyright issues and accused it of using “mafia-style intimidation of suppliers” to coerce them into signing exclusive agreements.
In Shein’s complaint, the company accused Temu of “brazen” illegal conduct. The company said at least one Temu employee stole “valuable trade secrets” that identified top-selling Shein products as well as internal pricing information to help it compete.
“Using this stolen information, Temu then directed its sellers to copy these and other best-selling Shein products and sell knock-off versions on Temu’s website and mobile applications,” the complaint states.
“Temu is not an ordinary infringer,” the lawsuit states. “To promote counterfeit versions of Shein products, Temu copied nearly identical copyrighted images of Shein products and used them or directed sellers to use them as promotional images on Temu’s website and mobile applications.”
Shein and Temu’s designs are shown side by side.
Image courtesy of the U.S. District Court for the District of Columbia
The company even stated that Temu impersonated Shein on social media website X in an attempt to “mislead customers from the Shein platform to the Temu platform.”
The complaint included a screenshot of a Temu-sponsored Google ad that showed Shein in the title but had the URL Temu.
“To further deceive consumers, Temu directed its paid social media influencers to falsely represent that Temu products were often counterfeits of Shein products that were cheaper and of higher quality than authentic Shein merchandise,” the complaint states. “Temu went to great lengths to imitate Shein, including Poach resources, employees and suppliers from Shein.”
Shein’s 80-page complaint includes more than a dozen examples of clothing and designs that Temu allegedly copied.
It has asked the court to rule in its favor and issue an order barring Temu from using Shein’s confidential information, among other requests.
Temu did not immediately respond to CNBC’s request for comment.
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