Chinese retail behemoth, Shein, is grappling with a lawsuit that implicates them in an expansive and organized act of intellectual property theft from American designers of all scales. The suit, filed in a California federal court by independent designers Krista Perry, Larissa Martinez, and Jay Baron, implicates Shein along with its affiliated entities in copyright and trademark infringements tied to their alleged systematic copying of creative works.
The plaintiffs in the recent lawsuit argue that the driving force behind Shein’s success isn’t high-end design akin to Coco Chanel or Yves Saint Laurent. Instead, they point to a secretive tech maestro, Xu Yangtian, alias Chris Xu. According to the plaintiffs, Shein has amassed billions by ingeniously detecting emerging fashion trends using a proprietary algorithm, which they claim is entwined with an efficient corporate structure, including production and fulfillment plans.
The plaintiffs suggest that this algorithm’s success hinges on generating exact copies of original designs, causing potential harm to independent designers’ careers. The accusation is that Shein’s AI has been cleverly crafted to misappropriate designs with high commercial viability.
Though it’s currently difficult to discern the specifics of Shein’s algorithm without further investigation, the plaintiffs argue that Shein’s infringement level is evident. They also claim to have unraveled the company’s distribution model, which involves producing minimal quantities of each product. This approach allegedly allows Shein to gauge the reaction to their designs and swiftly settle if any complaints of design theft arise.
The lawsuit particularly focuses on Shein’s replicas of the plaintiffs’ copyrighted graphic designs, which have been used on Shein products without permission or licensing. This infringement, according to the plaintiffs, has resulted in considerable damage to their businesses, including a loss of profits and the diminution of their designs’ value and their reputations.
More intriguing is the inclusion of Racketeer Influenced and Corrupt Organizations (RICO) Act claims in the lawsuit, which is linked to Shein’s alleged infringement operation. The plaintiffs contend that the RICO Act’s civil facet was formulated to handle misconduct by guilty individuals within larger enterprises. They argue that the considerable copyright infringement alleged against Shein equates to racketeering.
Shein’s complex corporate structure, according to the plaintiffs, is designed to evade liability and obscure basic information. They suggest that the company has previously resorted to deception to avoid accountability for intellectual property infringement. The plaintiffs claim that all Shein entities are interconnected, and due to their collective involvement in criminal copyright infringement, the defendants are engaging in multiple acts of racketeering and criminal copyright infringement.
Consequently, the plaintiffs are claiming copyright infringement, trademark infringement, and violations of the RICO Act. They are seeking monetary damages and injunctive relief to halt the Shein defendants from further participating in the alleged misconduct.